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A N

I N Ct U I R Y

INTO THE

NATURE AND CAUSES

OF THE

NATIO

B T

ADAM S M Ijr H, LL. D.

AND F.R.8. OF LONDON AND EDINBURGH:

ONE OP THE COMMISSIONERS OF HIS MAJESTY'S CUSTOMS

IN SCOTLAND ;

AND FORMERLY PROFESSOR OF MORAL PHILOSOPHY
IN THE UNIVERSITY OF GLASGOW.

IN THREE VOLUMES.
VOL. I.

THE FIFTH EDITION.

LONDON:

Printed for A. Strahan ; and T. Cadbll, in the Strand.

MDCCLXXXIX.

lElco-n ^^«|.^.%=(

..%

» >

TO TH*E

THIRD EDITION.

rr^HE firft Edition of the following Work
-^ was printed in the end of the year

1775, and in the beginning of the year

1776. Through the greater part of the
Book, therefore, whenever the prefent ftate
of things is mentioned, it is to be underflood
of the ftate they were in, either about that
time, or at fome earlier period, during the
time I was employed in writing the Book,
To the third Edition, however, I have made
feveral additions, particularly to the chapter
upon Drawbacks, and to that upon Bounties ;
likewife a new chapter entitled, The Conclu^

A3 Jm

ADVERTISEMENT.

fton of ibe Mercantile Syftern} and a new
article to the chapter upon the expences of
the fovereign. In all thefe additionB^ the

prefent Jiate of things means always the ftate
in which they were during the year 1783
and the beginning of the year 1 784,

( i

TO THE

FOURTH EDITION.

TN this fourth Edition I have made no al-
^ terations of any kind. I now, however,
find myfelf at liberty to acknowledge my very
great obligations to Mr. Henry Hope of Am-
fterdam. To that Gentleman I owe the moft
diftinft, as well as liberal information, con-
cerning a very interefting and important fub-
jed, the Bank of Amfterdam ; of which no
printed account had ever appeared to me fa-
tisfadtory, or even intelligible. The name of
that Gentleman is fo well kAown in Europe,
the information which comes from him muft
^o fo much honour to whoever has been fa-
4 voured

vi ADVERTISEMENT.

voured with it, and my vanity is fo much
interefted in making this acknowledgment^
that I can no longer refufe myfelf the plea-
fure of prefixing this Advertifement to this
new Edition of my Book»

CONTENTS

O F T H S

F I R ST VOLUME.

NTRODyCTION AND PlAN OF THE WORK

Page I

BOOK I.

Of the Caufes of Improvement in the pro-
dudlive Powers of Labour^ and of the
Order according to which its Produce
is naturally diftributed among the dif-
ferent Ranks of the People 6

CHAP. L

0/ the Divifion of Labour -— — ibid.

C H A p. II.

Of the Principle tobicb gives Occafion to the
Divifion of Labour — — • J 9

CHAP. III.

^bat tbe Divifion of Labour is limited by tbe
Extent of tbc Market — — a6

VIU

CONTENT $•

CHAP. IV,

Of the Origin and UJe of Money Page 33

C H A P. V.

Of the real and nominal Trite of Commodities y
or of their Price in Laiour, and their
Price in Money .-.- _ 43

CHAP. VI.

Of the component Parts of the Price of Com^
modities — — — 70

CHAP. VII.

Of the natural and market Price of Commodities 8 2

CHAP.' VIII.
Of the Wa^es of Labour , — 96

CHAP. IX.

Of the Profits of Stock . — — 133

C HAP. X.

Of Wages and Profit in the different Employ^
ments of Labour and Stock •— 1 51

Par^ I. Inequalities arijing from the Na-
ture of the Employments themf elves 152

^ Part II. Inequalities occaftoned hy the Policy
of Europe -^ — ? — • i8j

CONTENTS. m

CHAP. XI.

0/ f be Rent of Land — . — 'Page i2 23

Part I. 0/ the Produce of Land which aU
ways affords Rent — — 227

Part IL Of the Produce of Land which
Jometimes doesy and fome times does not ^ afford
Rent ^ • — _ _ _ 252

Part III. Of the Variations in the Propor-^
tion between the re/feSlive Values of that
Sort of Produce which always affords Rent,
and of that which fometimes does and fome-
times does not afford Rent — 273

Bigrejfion concerning the Variations in the
Value of Silver during the Conrfe ef the
Four laft Centuries.

Firft Period — -^ •_ 27^

Second Period — — •— 299

Third Period — — — ^oi

Variations in the Proportion htwien the re-
fpeSive Values i(f Gold and Silver -^^ ^jo

Grounds of the Sufpicion that the Value of
Silver Jiill continues to decreaje — - ^;fi

Different E0£ls of the Pro'grefs of Improvement
upon the real Price of three different Sorts
(if rude Produce — — . ^j^

CONTENT^.

FirfiSort — — — Page 340

Second Sort — — — 343

Third Sort — — — 35$

Conclttfton of the Digrejjion concerning the Va-
riations in the Value of Silver — 373

* «

EffeSIs of the Progrefs of Improvement upon the
real Price of ManufaSlures — 384

Conclufton of the Chapter -w -« 2^Z

BOOK 11.

Of the Nature, Accumulation, and Employ-
ment of Stock,

Introduction — «— 4^7

CHAP. I.

Of the Bivifton of Stock ■— 410

CHAP. II.

Of Monef eonfidered as a particular Branch of
the general Stock of the Society y or of the
Expence of maintaining th( National Capital 4ft j

A N

I N Ct U I R

I N T O T H E

NATURE AND CAUSES

O F T H E

WEALTH OF NATIONS,

. ^>««*»n

INTRODUCTION AND PLAN OF THE WORK.

THE annual labpur of every nation is the introduft.
fund which originally fupplies it with
all the neceflaries and conveniencies of
life which it annually confumes, and which con-
fift always cither in the imnciediate produce of
that labour, or in What is purchafcd with that pro-
duce from other nations,

ACCORDING therefore, as this produce, or what
is purchafed with it, bears a greater or fmaller
proportion to the number of thofc who are to
confume it, the nation will be better or worfe
fupplied with all the neceflaries and conveni-
encies for which it has occalion.

But this proportion muft in every nation be
regulated uy two different circumftances ; firft,
by the Ikill^ dexterity, and judgment with which

.V^L. I. B its

THE NATURE AND CAUSES OF

introdu^t.^ its labour is generally applied; and^ fecondly,
by the proportion between the number of thofe
who are employed in uleful labour, and that of
thofe who are not fo employed. Whatcva- be
the foil, climate, or extent of territory of any
particular nation, the abundance or fcantinefs of
its annual fupply muft^^ in that particular fitua-
tion, depend upon thofe two circumftances.

The abundance or fcantinefs of this fupply too
feems to depend more upon the former of thofe
two circumftances than . upon the latter, ' Among
the favage nations of hunters and fibers, every
individual who is able to work, is more or lels
employed in ufeful labour, and endeavours to
provide,, as well as he can, the ' neceffaries and
conveniencies of life, for himfelf, or fuch of his
fan>ily or tribe as are either too old, or too young,
or too infirm to go a huAing and fifhing. Such
nations, however, are fo miferably poor, that
from mere want, they are frequently reduced, or,
at leaft, think themfelves I'educed, to the necef-
fity fometimes of direftly destroying, and fome-
times of abandoning their infants, their old peo-
ple, and thofe afflidled with lingering difeafes, to
perifli with hunger, or to be devoured by wild
beafts. Among civilized and thriving nations,
on the contrary, though a great number of people
do not labour at all, many of whom confume the
produce of teh times, frequently of a hundred
times, more labour than the greater part of thofe
who work 5 yet the produce of the •vhole labour
of the fociety is lb great, that all are often abun-
dantly fupplied, and .a worknian, even of the

^ ."toweft

THE WEALTH OF NATIONS.* 3

loweft and pooreft order, if fee is frugal and in- i«^^jj^
duftribus, may enjoy a greater fhare of the ne-
ccflaries and conveniencies of life than it is pof-
fible for any favage to acquire.

Th[£ caufes of this improvenient> in the pro-
duftive powers of labour, and the order, accord*
ing to which its produce is naturally diftributcd
among the different ranks and conditions of men
in the fociety, make the fubjedl of the Firft Book
of this Inquiry.

Whatever be the aftual ftate pf the fkill,
dexterit)^ and judgment' with which labour is
applied in any nation, the abundance or fcanti-
nefs of its annual fupply muft depend, during the
continuance of that ftate, upon the proportion
between the number of thofe who are annually
employed in ufeful labour, and that of thofe who
are not fo employed. The number of ufeful and
produftive labourers, it will hereafter appear, is
every where in proportion to the quantity of ca-
pital ftock which is employed in fetting them to
work, and to tlft particular way in which it is
■fo employed. The Seqoqd Book, therefore, treats
of the nature of capital ftock, of the manner in
which it is gradually accumulated, and of the
different quantities of labour which it puts into
motion, according to the different ways irr which
it is employed.

Nations, tolerably well advanced as to flcill,

dexterity, and judgment, in the application of

labour, have falldwed very different plans in the

general conduct or direftion of it ; and thofe

• plins. have not all been equally favourable to the

B 2 * greatnefs

THE NATURE AND CAUSES OF

jntro^uft^ grcatnefs of its produce. The policy of fome
iiations has given extraordinary encouragement
to the induftry of the country j that of others to
the induftry of towns. Scarce any nation has
dealt equally and impartially with every fort of
induftry. Since the downfal of the Roman em-
pire, the policy of Europe has been more favour-
able to arts, manufaftures, and commerce, the
induftry of towns; than to agriculture, the in-
duftry of the country. The circumAances which
feem to have introduced and eftablifhed this po-
licy are explained in the Third Book, ^

Though thofe different plans were, perhaps^
-firil introduced by the private interefts and pre-
judices of particular orders of men, without any
regard to, or forefight of, their confequences
upon the general welfare of the fociety ; yet they
have given occafion* to very different theories
of political oeconomy ; of which fome magnify
the importance of that induftry which is carried
on in towns, others of that which is carried on in
the country. Thofe theories Hkve had a confi-
derable influence, not only upon the opinions of
men of learning, but upon the public condudt of
princes and fbvereign ftates. I have endeavour-
ed, in the Fourth Book, to explain, as fully and
diftinftly ^s I can, thofe different theories, and
the principal effefts which they have produced in
different ages and nations.

To explain in what has confifted the revenue
of the great body of the* people, or what has bech
the nature of thofe funds, which, in different ages
and nations^ have fupplied their annual confump-

t3on>

THE WEALTH OF NATIONS.

rion, istheobjeftofthefelFourfirftjBooks. The ^^*
Fifth and laft Book treats of the revenue of the
fovereign, or commonwealth. In this book I
Have endeavoured to fhowj firft, what are the
necefiary expences of the fovereign, or cornmon-
wealth i which of thofe expences ought to be de-
frayed by the general contribution of the whole
fociety ; and which of them, by that of fome par-
ticular part only, or of fome particular members
of it : fecondly, what are the different methods
in which the whole fociety may be made to con-
tribute tjpivards defraying the expences incum-
bent on the whole fociety, and what are the
principal advantages' and inconveniencies of eacTi
of thofe rriethods : and, thirdly and laftly, what
are the reafons and caufes which have induced
almoft all ' niodern, governments to mortgage
fome part of this revenue, or to contrad debts,
and what have been the effedls of thofe debts
upon the real wealth, the annual produce of the
land and labour of the fociety. *

B a BOOK

THE NATURE AND CAUSES OF

Book i.

Of the Caufes of Improvement in the produc-
tive Powers of Labour, and of the Order
according to which its Produce is naturally
diftributed among the different Ranks of
the People.

C H A p. I.

Of the Divifton of Labour.

BOOK rY^ H E greateft improvement in the produc-
X tive powers of labour, and the greats:
part of the (kill, dexterity, and judgment with
which it is any where direftcd, of applied, feem
to have been the efffefts of the divifion of la-
bour.

The effefts of the divifion of labour, in the
general bufinefs of fociety, will be more eafily
underftood, by confidering in what manner it
operates in feme particular manufa&ures. It is
commonly fuppofed to be carried furtheft in
fome very trifling ones; not perhaps that it
really is carried further in them than in others of
more importance : but in thofe trifling manufac-
tures which are deftined to fupply the fmall wants
of but a fmall number of people, the whole
number of workmen muft neceflTarily be fmall ;
and thofe employed in every difFererit branch of
the work can often be collected into the fame

workhoufe.

THE WEALTH OF NATIONS. 7

I t

workhoufe, and placed at once under the view of c h a p.
the Ipeftator. In tl;iofe great manufafturesj on
the contrary, which are deftined to fupply the
great wants of the great body of the people,
every different branch of the work employs lb
' great a nunnber of workmen, that it is impoflible
to colledt them all into the fame workhoufe. We
can leldom fee more, at one time, than thofe em-
ployed in one fingle branch. Though in fuch
manufaftures, therefore, the work may really be
divided into a much greater number of parts,
than in thofe of a more trifling nature, the divi-
fion is not near fo obvious, and has accordingly
been much lefs obfervcd.

To take an example, therefore, from a very
trifling manufefture ; but one in which the divi-
fion of labour has been very often taken notice
of, the trade of th^ pin-maker ; a workman not
educated tp this bufinefs (which the divifion of
labour has rendered a diftifift trade), nor ac-
quainted . with the ufe of the machinery employed
W it (to the invention of which the fame divi-
fion of labour has probably given occafion),
could fcarce, perhaps, with his utmoft induftry,
make one pin in a day, and certainly could not
make' twenty. But in the way in which this
bufinefs is now carried on, not only the whole
work is . a peculiar trade, but it is divided into a
number of branches, of which the greater part
are likewife peculiar trades. One man draws
out the wire, another ftraights it, a third cuts it,^
a fourth points it, a fifth grinds it dt the top for
receiving the head 3 to make the head requires

B 4 two

g THE NATURE AND CAUSES OF

BOOK two or three diftinft operations; to put it on, is
a peculiar bufincfs, to whiten the pins is another;
it is even a trade by itfelf to put them into the
paper; and the important bufmefs of making a
pin is, in this manner, divided into about eigh-
teen diftinft operations, which, in fome manu-
faftories, are all performed by diftindt hands,
though in others the fame man will fometimes
perform two or three of them. I have feen a
fmall manufaftory of this kind where ten men
only were employed, and where fome of them
confequently performed two or ^ree diftindt
operations. But though they were very poor,
and therefore but indifferently accommodated
with the neceffary machinery, they could, whea
they exerted themielves, make among them
about twelve pounds of pins in a day. There
are in a pound upwards of four thoufand pins of
a nriiddling fize. Thofe ten perfons, therefore,
could make among ^hem upwards of forty-eight
thoufand pins in a day. Each perfon, therefore,
making a tenth part of forty-eight thoufand
pins, might be confidered as making four thou-
fand eight hundred pins in a day. But if they
had all wrought feparately and independently,
and without any of them having been educated
to this peculiar bufinefs, they certainly could not
each of them have made twenty, perhaps not one
pin in a day; that is, certainly, not the two
hundred and fortieth, perhaps not the four thou-
fand eight hundredth part of what they are at
prefcnt capaCle^ <jf performing, in confequence of

a proper

THE WEALTH OF NATIONS* 9

a proper divifion and combination of their differ- ^ hap.
ent operations.

In every other art and manufafturc, the effe£b
of the divifion of labour are fimilar to what they
are in this very trifling one ; though, in many of
them, the labour can neither be fo much fubdi-
vided, nor reduced to fo great a fimplicity of
operation. The divifion of labour, however, fo
far as' it can be introduced, occafions, in every
art, a proportionable increafe of the produftivc
powers of labour. The feparation of different
trades and employments from one another, feems
to have taken place, in confequence of this ad-
vantage. This feparation too is generally carried
furtheft in thofe countries which enjoy the highed
degree of induftry and improvement ; what is the
work of one man in a rude ftate of fociety, being
generally that of feveral in an improved one,*
In every improved fociety, the farmer is gene-
rally nothing but a farmer; the manufa6turer,
nothing but a manufacturer. The labouf too
which is neceffary to produce any one complete
manufa<Slure, is almoft always divided among a
great number of hands. How many different
trades are employed in each branch of the linen
and woollen manufadtures, from the growers of
the flax and the wool, to the bleachers and
fmoothers of the linen, or to the dyers and dreff-
ers of the cloth ! The nature of agriculture, in-
deed, does not admit of fo many fubdivifiohs of
labour, nor of fo complete a fepajation of one
bufinefs from another, as manufadures. It is
impoffible to feparate fo entirely, the bufinefs of

the

!• THE NATURE AND CAUSES OF

* o o K |;jjg grazier from that of the corn-farmer, as the
trade of the carpenter is commonly ieparated
from that of the fmith. The Ipinncr is almoft
always a diftind perfbn from the weaver; but
the ploughman^ the harrower> the fower of the
feed, and the reaper of the corn, are often the
fame. The occafions for thofe different forts of
k^ur returning with the different feafons of the
year, . it is impoflible that one man ihould be con-
ftantly employed in any one of them. This im-
pollibility of making fo complete and entire a fe-
paration of all the different branches of labour
employed in agriculture, is perhaps the reafon why
the improvement of the produftive powers of la-
bour in this ai^t, does not always keep pace with
their improvement in manufaftures. The moll
opulent nations, indeed, generally excel all their
neighbours in agriculture as well as in manufac*
tures; but they are commonly more diftin-
guifhed by their fuperiority in the latter than in
the former. Their lands ' are in general better
cultivated, and having more labour and expence
beftowed upon them, produce more in propor-
tion to the extent and natural fertility of the
ground. But this fuperiority of produce is fel-
dom much more than in proportion to the fupe*
riority of labour and expence. In agriculture,
the labour of the rich country is not always
much more produftive than that of the poor ; or,
at leaft, it is never fo much more produftive, as
it commonly is in manufactures. The corn of
the rich country, therefore, will not always, in
the fame degree of goQdnefs, CQme cheaper to

market

THE WEALTH OF NATIONS. it

market than that of the poor. The corn of Po^ c k a p.
land^ in the fame degree of goodnefs^ is as cheap
as that of France, notwithftanding the fuperior
opulence and improvement of the latter countrf.
The corn of France is, in the corn provinces,
fully as good, and in mod years nearly about the
fame price with the corn of England, though, in
opulence and improvement, France is perhaps
inferior to England. The corn-lands of Eng^
land, however, arc better cultivated than thofe of
France, and the corn-lands of France are faid to
be much better cultivated than thofe of Poland.
But though the poor country, notwithftanding
the inferiority of its cultivation, can, in fome
meafure, rival the rich in the cheapneis and
goodnefs of its corn, it can pretend to no flick
competition in its manu&fhires ; at leaft if thofe
manufa6lures fuit the foil, climate, and iituation
of the rich country. The filks of France arc
better and cheaper than thofe of England, be-
cafe the filk manufadure, at leaft under the
prefent high duties upon the importation of raw
filk, does not fo well fuit the climate of England
as that of France. But the hard-ware and the
coarfe woollens of England are beyond all com-
parifon fuperior to thofe of France, and much
cheaper too in the fame degree of goodnefs. In
Poland there are faid to be fcarce any manufac-
tures of any kind, a few of thofe coarfer houfehold
manufadures excepted, without which no coun-
try can well fubfift.

This great increafe of the quantity of work,
which, in confcquence of the divifion of labour,

9 the

tz * ITB NATURE AND CAUSES OF

B 0^0 K the fame number of people are capable of per-
forming, is owing to three different clrcumftances;
firft, to the increafe of dexterity in every par-
ticular workman; fecondly, to the faving of
the time which is commonly loft in paffing from
one fpecies of work to another i and laftly, to
the invention of a great number of machines
which facilitate and abridge labour, and enable
one man to do the work of many.

First, the improvement of the dexterity of
the workman neceffarily increafes the quantity of
the work he can perform i and the divifion of
labour, by reducing every man's bufmefs to fome
one fimple operation, and by making this ope-
ration the fole employment of his life, necefla-
rily increafes very much the dexterity of the
workman. A common fmith, who, though ac--
cuftomed to handle the hammer, has never been
ufed to make nails, if upon fome particular oc-
cafion he is obliged to attempt it, will fcarce, I
am affured, be able fo make above two or three
hundred nails in a day, and thofe too very bad
ones. A fmith who has been accuftomed to
make nails, but whofe fole or principal bufinefs
has not been that of a nailer, can feldom with his
utmoft diligehce make more tiian eight hundred
or a thoufand nails in a day. 1 have feen feve-
ral boys under twenty years of zgt who had
never exercifed any other trade but that of mak-
^ing nails, and who, when they exerted them-
felves, could make, each of them, upwards of
two thoufand three hundred nails in a day. . The
, making of a nail, however, is by no mc^ins one
^ / of

THE WEALTH OF NATIONS. ^ 13

of the fimplcft operations. The fame perfori ^ ^^^ ^*
blows the bellowsj ftirs or mends the fire as there
is occafk>n> heats the iron, and forges every part
of the nail : In forging the head too he is
obliged to change his tools. The different ope-
rations into which the making of a pin, or of a
metal button, is fubdivided, are all of them
much more fimpfe, and the dexterity of the per-
ibn, of whofe life it has been the fole bufinefs to
perform them, is ufually much greater* The ra-
pidity with which fome of the operations of thofe
manufadures are perfornied, exceeds what the'
human hand couldj^ by thofe who had never feen
them, be fuppofed capable of acquiring, ^

Secoji DLY, the advantage which is gained by
faving the time commonly loft in paffing from
one fort of .work to another, is much greater
than we fliould at firft view be apt to imagine it.
It is impoflible to pafs very quickly from one
kind of work to another, that is carried : on in a
different place, and with quite different tools.
A country weaver, Who cultivates a fmall farm,
muft lofe a good deal ^of time in pafling from his
loom to the field, and from the field to his loom.
When the two trades can be carried on in the
fame workhoufe, the lofs of time is no doubt
much lefs. It is even in this cafe, however, very
confidcrable. A man commonly faunters a little
in turning his hand from one fort of employment
to another. When he firft begins the new work ^
he is feldom very keen and hearty ; his mind, as
they fay, does not go to it, and for fome time he
father trifles than applies to good purpofc. The

habit

t4 THE NATURE AND CAUSES OF

a 0 0 K j^abk of fauntcring and of indolent carelefs ap-
plication^ ^^ch is naturally, or rather necefla-
rily acquired by every country workman who h
^ obliged to change lus work and his tools every
half hour, and to apply his hand in twenty dif-
ferent ways ..almoft every day of his life ; renders
him almoft always flodiful and lazy, and inca^^
pabie of any vigorous application even on the
moft prefling occafions. Independent, therefore,
of his deficiency in point of dexterity, this caufe
alone muft always reduce confiderabiy the quan-
tity of work which he is capable of performing.

Thirdly, and laftly, every body muft be fen-
fible how much labour is facilitated and abridged
by the application of proper machinery. It is
unneceflary to give any example. I fhall only ob-
fcrve, therefore, that the invention of all thofe
\ machines by which labour is fo much facilitated
land abridged, feems to have been originally
lowing to the divifion of labour. Men are much
tnore likely to difcover eafier and readier me-
thods of attaining any objeft, when the whole
attention of their minds is diredted towards that
, (ingle objeA, than when it is diflipated among a
great variety of things. But in confequerice of
the divifion of labour, the whole of every man's
attention comes naturally to be direded towards
fome one very fimple objeft. It is naturally to
be expeded, therefore, that fome one or other of
thofe who are employed in each particular branch
of labour ihould foon find out eafier and readier
methods of performing their own particular
work, whcrevtr tlie nature of it admits of fuch

/ impf-oi(pment.

THE WEALTH OP NATIONS. .%j

improvement. A great part of the machines char,
made ufe of in thofe mamrfa&ures in which la-
bour is moft fubdivided, were originaUy riie in-
ventions of common workmen, who, being each
of them employed in fome very fimple operation,
naturally turned their thoughts towards finding
out eafier and readier methods of performing it*
Whoever has been much accuftomed to vifit fuch
manufaftures, muft frequently have been Ihewn
very pretty machines, which were the inventions
of fuch workmen, in order to facilitate and
quicken their own particular part of the work.
In the firft fire-engines, a boy was conftantly em-
ployed to open and fhut alternately the commu-
nication between the boiler and the cylinder, ac-
cording as the pifton either afcended or de-
fcended. One of thofe boys, who loved to play
with his companions, obferved that, by tying a
ftfing fix)m the handle of the valve which opened
this communication to another part of the ma-
chine, the valve would open and fliut without his-
afliftance, and leave him at liberty to divert
himfelf with his play-fellows. One of the
greateft improvements that has been made upon
this machine, fince it was firft invented, was in
this manner the difcovcry of a boy who wanted
to fave his own labour.

All the improvements in machinery, how-
ever, have by no means been the inventions of
thofe who had occafion to ufe the machines.
Many improvements have been made by the
ingenuity of the makers' of the machines, whea

t»^ THE NATURE AND CAUSES OF

BOOK to make them became the bufinefs of a peculiar
trade ; and fome by that of thofe who are called
philofbphers or men of fpeculation^ whofe trade
it is not to do anything, but to obferve fevery
thing; and- who, upon that account, are often
capable of combiaing together the powers of the
moft diftant and diffimilar objefts. In, the pro-
grefs of fociety, phildfophy or fpeculation be-
comes, like every other employment, the prin-
cipal or fole trade and occupation of a particular
clafs of citizens. Like every other employment
too, it is fubdivided into a great number of
different branches, each of which affords occu-
pation to a peculiar tribe or clafs of philofb-
phers; and this fubdivifion of employment in
philofophy, as well as in every other bufinefs,
improves dexterity, and faves time* Each indi-
vidual becomes more expert in his own peculiar
branch, more work is done upon the wholfe,
and the quantity of fcience is confiderably in-
creafed by it.

It is the great multiplication of the produc-
tions of all the different arts, in confequence
of the divifion of labour, which occafions, in a
well-governed fociety, that univerfal opulence
which extends itfelf to the loweft ranks of the
people. Every workman has a great quantity
of his own work to difpofe of beyond what he
himfelf has occafion for ; and every other work-
man being exaftly in the fame fituation, he is
enabled to exchange a great quantity of his own
goods for a great quantity, or, what comes to
the fame thing, for the price of a great quan-
tity

THE WEALTH Ot NATIONS. 17

tity of theirs. He fupplies them abundantly chap.
with what they have occafion for, and they
accommodate hini as amply with what he has
occafion for, and a general plenty difFufes itfelf
through all the different ranks of the fociety.

Observe the accommodation of the moft com-
mon artificer or day-labourer in a civilized and^
thriving country, and you will perceive that the
number of people of whofe induftry a part,
though but a fmall part, has been employed in
procuring him this accommodation, exceeds all
computation. The woollen coat, for example,
which covers the day-labourer, as coarfe and
rough as it may appear, is the produce of the
joint labour of a great multitude of workmen.
The fliepherd, the forter of the wool, the wool-
comber or carder, the. dyer, the fcribbler, the
Ipinner, the weaver, the fuller, the dreflet, with
many others, muft all join their different arts in
order to complete even this homely produftion.
How many merchants and carriers, befidcs, muft
have been employed in tranfporting the mate-
rials from fbme of thofe workmen to others who
often live in a very diflant part of the country !
how much commerce and navigation in parti-
cular, how many ftiip-builders, failors, fail-
makers, rope- makers, mufl have been employed
in order to bring together the different drugs
made ufe of by the dyer, which often come from
the remotefl corners of the world ! What a
variety of labour too is neceffary in order to
produce the tools of the meanefl of thofe work-
men ! To fay nothing of fuch complicated ma-
VoL, I. C chines

i8 THE NATURE AND CAUSES OF

BOOK chines as the fhip of the failor, the mill of the
fuller, or even the loom of the weaver, let us
confidcr only what a variety of labour is requi-
fite in order to form that very fimple machine,
the (hears with which the fliepherd clips the
wool. The miner, the builder of the furnace
for fmelting the ore, the feller of the timber,
the burner of the charcoal to be made ufe of in
the fmelting- houfe, the brick-maker, the brick-
layer, the workmen who attend the furnace, the
mill- Wright, . the forger, the fmith, • muft all of
them join their different arts in order to produce
them. Were we to examine, in the fame man-
ner, all the different parts of his drefs and
houfelM>ld furniture, the coarfe linen Ihirt which
lie wears next his Ikin, the Ihoes which cover his
feet, the bed which he lies on, and all the dif-
ferent parts which compqfe it, the kitchen-grate
at which he prepares his' vidluals, the coals
which he makes ufe of for that purpofe, dug
from the bowels of the earth, and brought to
him perhaps by a long fea and a long land
carriage, all the other utenfils of his kitchen,
all the furniture of his table, the knives and
forks, the earthen or pewter plates upon which
he ferves up and divides his vidbuals, the dif-
ferent hands employed in preparing his bread
and his beer, the glafs window which lets in the
heat and the light, and keeps out the wind and
the rain, with all the knowledge and art requi-
fite for preparing that beautiful , and happy in-
vention, without which thefe northern parts of
the world could fcarce have afforded a very

comfortable

THE WEALTH OF NATIONS. 19

comfortable habitation, together with the tools chap.
of all the difKjrent workmen employed in pro- ^*
ducing thofe different conveniencies -, if we ex-
amine, I fay, all thefe things, and confider what
a variety of labour is employed about each of
them, we fliall be fenfible that without the
affiftance and co-operation of many thoufonds,
the very meaneft perfon in a civilized country
could not be provided, even according to, what
we very falfely imagine, the eafy and fimple
manner in which he is commonly accommodated.
Compared, indeed, with the more extravagant
luxury of the great, his accommodation muft no
doubt appear extremely fimple and eafy; and
yet it may be true, perhaps, that the accommo-
dation of an European prince does not always
ib much exceed that of an induftrious and frugal
peafant, as the accommodation of the latter
exceeds that of many an African king, the ab-
folute matter of the lives and liberties of ten
thoufand naked favages.

•^

CHAP. II.

Of the Principle which gives occafion to the

Divijion of Labour.

THIS divifion of labour, from which fp
many advantages are derived, is not pri-
j ginally the effeft of any human wifdom, which
I forefees and intends that general opulence to

C 2 which

ao THE NATURE AND CAUSES OF

BOOK which it giyes occafion. It is the neceflary,

■^ though veiy flow and gradual, confequence of a

Vcertain propenfity in human nature which has in

view no fiich extenfive utility ; the propenfity

to truck, barter, and exchange one thing for

another.

Whether this propenfity be one of thofe
original principles in human nature, of which
;no further account can be given; or whether,
as feemls more probable, it be the neceflary
confequence of the faculties of reafon and fpeech,
it belongs not to our prefent fubjeft to enquire.
It is common to all men, and to be found in
no otjier race of animals, which feem to know
neither this nor any other ipecies of contrafts.
Two greyhounds, in running down the fame
hare, have fometimes the appearance of afting in
fome fort of concert. Each turns her towards
his companion, or endeavours to intercept her
when his companion turns her towards himfelf.
This, however, is not the efFeft of any contraft,
but of the accidental concurrence of their paf-
fions in the fame objedt at that particular time.
Nobody ever faw a dog make a fair and delibe-
rate exchange of one bone for another with
another dog. Nobody ever faw one animal by
its geftures and natural cries fignify to another,
this is mine, that yours; I am willing to give
this for that. When an animal wants to obtain
fomething either of a man or of another animal,
it has no other means of perfuafion but to gain
the favour of thofe whofe fervice it requires. A
puppy fawns upon its dam, and a Ipanicl endea-
vours

THE WEALTH OF NATIONS. 21

yours by a thoufand attraftions tp engage the c h a h.
attention of its nnafter who is at dinner, when it
wants to be fed by him. Man fometimes ufes
the fanae arts with his brethren, and when he
has no o^her means of engaging them to aft
according to his inclinations, endieavours by
every fervile and fawning attention to obtain
their good will. He has not time, however,
to do this upon every occafion. In civilized
fociety he ftands at all times in need of the
co-operation and affiftance of great multi-
tudes, while his whole life is fcarce fufEcient
to gain the friendihip of a few perfons. In
almoft every other race of animals each in-
, dividual, when it is grown up to maturity, is.
^v Nmtirely" independent, and in its natural ftate has
occafion for the affiftance of no other living
creature. But man has almoft conftant occa-
fion for the help qf his brethren, and it is ia
vain for him to expeft it from their benevolence
only. He will be more likely to prevail if he
can intereft their felf^love in his favour, and
ftiew them that it is for their own advantage
to do for him what he requires of them. Who-
ever offers to another a bargain of any kind,
propofes to do this : Give me that which \\
want, and you fhall have this which you want,\
is the meaning of every fuch offer i and it is in
this manner that we obtain from one another
the far greater part of thofe good offices which
we ftand in need of. It is not from the benevo-
lence of the butcher, the brewer, or the baker,
that we expeft our dinner, but from their

C 3 regard.

92 THE NATURE AND CAUSES OF

BOOK regard to their own intereft. We addrels our-
felves, not to their humanity but to their felf-
love, and never talk to them of our own
neceflities but of their advantages. Nobody
but a beggar chules to depend ch^pfly upon
the benevolence of his fellow-citizens. Even
a beggar does not depend upon it entirely.
The charity of well-difpofed people, indeed>
fupplies him with the whole fund of his liib-
fiftence. But though this principle ultimately
provides him with all the neceffaries of life
which he has occafion for, it neither does nor
can provide him with them as he has occafion
for them. The greater part of his occafional
wants are lupplied in the fame manner as thofe
of other people, by treaty, by barter, and by
purchafc. With the money which one man
gives him he purchafes food. The old cloaths
which another beftows upon him he exchanges
for other old cloaths which fuit him better, or
for lodging, or for food, or for money, with
which he can buy either food, cloaths, or lodg-
ing, as he has occafion.

As it is by treaty, by barter, and by purchafe,

that we obtain from one another the greater part

of thofe mutual good offices which we Hand in

need of, fo it is this fame trucking dilpofition

! which originally gives occafion to the divifion

\ of labour. In a tribe of hunters or Ihepherds

' a particular perfon makes bows and arrows, for

example, with more readinefs and dexterity than

any other. He frequently exchanges them for

catde or for venifon with his companions 3 and

THE WEALTH OF NATIONS. 23

he finds at laft that he can in this manner get c h a p,

II.
more cattle and venifoh^ than if he himfelf went

to the field to catch theju. From a regard to
his own intereft^ therefore, the making of. bows
and arrows grows to be his chief bufinefs, and
he becomes a fort of armourer. Another excels
in making tlie frames and covers of their little
huts or moveable houfes. He is accuftomed to
be of ufc in this way to his neighbours, who re-
ward him in the fame riaanner with cattle and
with venifon, till at laft he finds it his intereft
to dedicate himfelf entirely to this employment,
and to become a fort of houfe-carpenter. In
the fame manner a third becomes a fmith or a
brazier \ a fourth a tanner or dreffer of hides or
Ikins, the principal part of th^ clothing of
favages. And thus the certainty of being able
tp exchange all that furplus part of the produce
of his own labour, which is over and above his
own confumption, for fuch parts of the produce
of other men's labour as he may have occafion
for, encourages every man to apply himfelf
to a particular occupation, and to cultivate and
bring to perfeftion whatever talent or genius
he may poflefs for that particular Ipccies of bufi-
nefs.

The difference of natural talents in different
men is, in reality, much lefs than we are awart
of i and the very different genius which appeara
to diftinguilh men of different profeffions, when
grown up to maturity, is not upon many occa-
fions fo much the caufe, as the effe^ of the
divifion of labour. The difference between the

C 4 moft

24 THE NATURE AND CAUSES OF

BOOK moft diffimilar charafters, between a philofopher
and a common ftreet porter, for example, fccms
tp arife not fb much from nature, as from habit,
cuftom, and education. When they came into
the world, and for the firft fix or eight years of
their exiftence, they were, perhaps, very much
alike, and neither their parents nor playfellows
could perceive any remarkable difference. About
that age, or foon after, they come to be em-
ployed in very different occupations. The dif-
ference of talents comes then to be taken notice
of) and widens by degrees, till at laft the vanity
of the philofopher is willing to acknowledge fcarce
any refemblance. But without the difpofition to
truck, barter, and exchange, every man muft
have procured to himfelf every neceffary and
conveniency of life which he wanted. All muft
have had the fame duties to perform, and the
fame work to do, and there could have been no
fuch difference of employment as could alone
give occafion to any great difference of talents.

As it is this difpofition which forms that dif-
ference of talents, fo remarkable among men of
different profefllons, fo it is this fame difpofition
which renders that difference ufeful. Many tribes
of animals acknowledged to be all of the
fame fpecics, derive from nature a much more
remarkable diftinftion of genius, than what,
antecedent to cuftom and education, appears to
take place among men. By nature a philofopher'
is not in genius and difppfition half fo different
from a ftreet porter, as a maftiff is from a grey-
hound, or a greyhound from a fpanicl, or this

laft

THE WEALTH OF NATIONS. ij

laft from a fhepherd's dog. Thofe difFerent chap.
tribes of animals, however, though all of the .^_J
fame Ipecies, are of fcarce any ufe to one an-
other. The ftrength of the maftifF is not in
the leaft fupported either by the fwiftnefs of the
greyhound, or by the fagacity of the Ipaniel, or
by the docility of the fhepherd's dbg. The
efFefts of thofe different gcniufes and talents, for
want of the power or difpofition to barter and ex-
change, cannot be brought into a common ftock,
and do not in the leaft contribute to the better
accommodation and conyeniency of the Ipecies,
Each animal is ftill obliged to fupport and de-
fend itfelf, ' feparately and independendy, and
derives no fort of advantage from that variety of
talents with which nature has diftinguifhed its
fellows. Among men, on the contrary, the moft
diffimilar geniufes are of ufe to one another; the!
difFerent produces of their refpedtive talents, by
the general difpofition to truck, barter, and ex-
change, being brought, as it were, into a com-
mon ftock, where every man may purchafe what-
ever part of the produce of other men's talents
he has occafion for.

CHAP.

^ THE NATURE AND CAUSES OF

V'. C H A P. III.

^at the Divifion of Labour is limited by the

Extent of the Market,

S it is the power of exchanging that gives
occafion to the divifion of labour, fo the
extent of this divifion muft always be limited by
the extent of that power, or, in other words, by
the extent of the market. When the market is
very fmall, no perfon can have any encourage-
ment to dedicate himfeif entirely to one employ-
ment, for want of the power to exchange .all that
furplus part of the produce of his own labour,
which is over and above his own confumption,
for fuch parts of the produce of other men's
labour as he has occafion for.

There are fbme forts of induftry, even of the
lowefl: kind, which can be carried on no where
but in a great town. A porter, for e^mple, can
find employment and fubfiftencc in no other
place. A village is by much too narrow a
Iphere for him; even an ordinary market town
is fcarce large enough to afford him conftant
occupation. In the lone houfes and very fmall
villages which are fcattered about in fo defert a
country as the Highlands of Scotland, every
farmer muft be butcher, baker and brewer for
his own family. In fuch fituations we can fcarce
expe£t to find even a fmith, a carpenter, or a
mafon, within lefs than twenty miles of another
of the fame trade. The fcattered JRmilies that

live

THE WEALTH OF NATIONS. ty

live at eight or ten miles diftance from the c h a p.
neareft of them, muft learn to perform them- "'*
fclves a great number of little pieces of work,
for which, in more populous countries, they
would call in the affiftance of thofe workmen.
Country workmen are almoft every where obliged
to apply themfelves to all the different branches
of induftry that have fo much affinity to one
another as to be employed about the fame fort
of materials. A country carpenter deals in every
fort of work that is made of wood : a country
fmith in every fort of work that is made of iron.
The former is not only a carpenter, but a joiner,
a cabinet maker, and even a carver in wood,
as well as a wheelwright, a plough-wright, a
cart and waggon maker. The employments of
the latter arc ftill more various. It is impoffible
there Ihould be fuch a trade as even that of a
nailer in the remote and inland parts of the-
Highlands of Scotland. Such a workman at
the rate of a thoufand nails . a day, and three
hundred working days in the year, will make
three hundred thoufand nails in the year. But
in fuch a fijtuation it would be impoffible to
difpofe of one thoufand, that is, of one day's
work in the year.

As by means of water-carriage a more exten-
five market is opened to every fort of induftry
than what land-carriage alone can affi^rd it, fo it
is upon the fea-coaft, and along the banks of na-
vigable rivers, that induftry of every kind natu-
rally begins to fubdivide and improve itfelf^ and
it is freq3endy not till a long time after that

^ thofe

28 THE NATURE AND CAUSES OF

BOOK thofe improvements extend themfelves to the in-
}'_ , land parts of the country. A broad-wheeled
waggon, attended by two men, and drawn by
eight horfes, in about fix weeks time carries and
brings back between London and Edinburgh
near four ton weight of goods. In about the
lame time a Ihip navigated by fix or eight men,
and failing between the ports of London and
Leith, frequently carriesi and brings back two
hundred ton weight of goods. Six or eight
men, therefore, by the help of water-carriage,
can carry and bring back in the fame . time the
iame quantity of goods between London and
Edinburgh, as fifty broad -wheeled waggons, at-
tended by a hundred men, and drawn by four
hundred horfes. Upon two hundred tons of
goods, therefore, carried by the cheapeft land-
carriage from London to Edinburgh, there muft
be charged the maintenance of a hundred men
for three weeks, and both the maintenance, and,
what is nearly equal to the maintenance, the
wear and tear of four hundred horfes as well as of
fifty great waggons. Whereas, upon the fame
quantity of goods carried by water, there is to
be charged only the maintenance of fix or eight
men, and the wear and tear of a ftiip of two
hundred tons burthen, together with the value of
the fuperior rifk, or the difference of the infu-
rance between land and water-carriage. Were
there no other communication between thofe two
places, therefore, but by land-carriage, as no
goods could be tranlported from the one to the
other, except fuch whofe price was very confi-

derable

THE WEALTH OF NATIONS. 29

derable in proportion to their weight, they could
carry on but a fmall part of that commerce
which at prefent fubfifts between them, and con-
fequently could give but a fmall part of that en-
couragement which they at prefent mutually
alFord to each other's induftry. There could be
litde or no commerce of any kind between the
diftant parts of the world. What goods could
bear the expence of land- carriage between Lon-
don and Calcutta? Or if there were any fo pre-
cious as to be able to fupport this expence, with
what fafety could they be tranfported through
the territories of fo many barbarous nations?
Thofe two cities, however, at prefer^t carry on a
very confiderable commerce with each other, and
by mutually affording a market, give a good
deal of encouragement to each other's induftry.

Since fuch, therefore, are the advantages of
water-carriage, it is natural that the firft improve-
ments of art and induftry ftiould be made where
this conveniency opens the whole world for a
market to the produce of every fort of labour,
and that they ftiould always be much later in ex-
tending therhfelves into the inland parts of the
country. The inland parts of the country can
for a long time have no other market for the
greater part of their goods, but the country
which lies round about them, and feparates them
from the fea-coaft, and the great navigable ri-
vers. The extent of their market, therefore,
muft for a long time be in proportion to thei
riches and populdufnefs of that country, and con-/
fequently their improvement muft always be pofj

terior

3« THE NATURE AND CAUSES OP

■

BOOK tenor to the improvement of that country. In
our North American colonies the plantations
have conftantly followed either the fea-coafl: or
the banks of the navigable rivers, and have
fcarce any where extended themfclves to any
confiderable diftance from both.
; The nations that, according to the beft
authenticated hiftory, appear to have been firft
civilized, were thofe that dwelt round the coail:
of the Mediterranean fea. That fca, by far the
greateft inlet that is known in the world, having
no tides, nor confequendy any waves except
fuch as are caufed by the wind only, was, by the
fmoothnefs of its farface, as well as by the mul-
titude of its iflands, and the proximity of its
neighbouring fhores, extremely favourable to the
infant navigation of the world -, when, from their
ignorance of the compafs, men were afraid to
quit the view of the coaft, and from the imper-
feftion - of the art of Ihip-building, to abandon
thcmfelves to the boifterous waves of the ocean.
To pafs beyond the pillars of Hercules, that is,
to fail out of the Streights of Gibraltar, was, in
the antient world, long confidered as a mofl
wonderful and dangerous exploit of navigation.
It was late before even the Phenigians and Car-
thaginians, the moft fkilful navigators and fhip-
builders of thofe old times, attempted it, and
they were for a long time the only nations that
did attempt it.

Of all the countries on the coaft of the Medi-
terranean fea, Egypt feems to have been the firfl

in which either agriculture or manufaftures were

cultivated

THE WEALTH OF NATIONS. 31

Cultivated and improved to any confiderable chap.
degree. Upper Egypt extends itfelf nowhere
above a few miles from the Nile, and in Lower
Egypt that great river breaks itfelf into many
different canals, which, with the afliftance of a
little art, feem to have afforded a communica-
tion by water-carriage, not only between all the
great towns, but between all the confiderable
villages, and even to many farm-houfes in the
country j nearly in the lame manner as the Rhine
and the Maefe do in Holland at prefent. The
extent and eafinefs of this inland navigation was
probably one of the principal caufes of the early
improvement of Egypt.

The improvements in agriculture and manu-
faftures feeni likewife to have been of very great
antiquity in the provinces of Bengal in the Eaft
Indies, and in fome of the eaftern provinces of
China; though the great extent of this antiquity
is not authenticated by any hiftories of whofe
authority, we, in this part of the world, are well
aflured. In Bengal the Ganges and feveral other
great rivers form a great number of navigable
canals in the fame manner as the Nile does in
Egypt. In the Eaftern provinces of China too,
feveral great rivers form, by their different
branches, a multitude of canals, and by commu-
nicating with one another afford an inland navi-
gation much more extenfive than that either of
the Nile or the Ganges, or perhaps than both of
them put together. It is remarkable that neither
the antient Egyptians,^ nor the Indians, nor the
Chinefe, encouraged foreign commerce, but

feem

32 THE NATURE AND CAUSES OF

BOOK feem all to have derived their great opulence

- from this inland navigation.

All the inland parts of Africa, and all that
part of Afia which lies any confiderable way-
north of the Euxine and Calpian feas, the antient
Scythia, the modern Tartary and Siberia, feem
in all ages of the world to have been in the fame
barbarous and uncivilized ftate in which we find
them at prefcnt. The fea of Tartary is the fro-
zen ocean which admits of no navigation, and
though fome of the greateft rivers in the world
run through that country, they are at too great a
diftance from one another to carry commerce
and communication through the greater part of
it. There are in Africa none of thofe great in-
lets, fuch as the Baltic and Adriatic feas in
Europe, the Mediterranean and Euxine feas in
both Europe and Afia, and the gulphs of Arabia,
Perfia, India, Bengal, and Siam, in Afia, to
carry maritime commerce into the interior parts
of that great continent : and the great rivers of
Africa are at too great a difl:ance fi-om one ano-
ther to give occafion to any confiderable inland
navigation. The commerce befides which any
nation can carry on by means of a river which
does not break itfelf into any great number of
branches or canals, and which runs into another
territory before it reaches the fea, can never be
very confiderable; becaufe it is always in the
power of the nations who poflefs that other terri-
tory to obfl:ru6t the communication between the
upper country and the fea. The navigation of
the Danube is of very little ufe to the difix^rent

ftates

THE WEALTH OP ^TIONS. 33

ftates of Bavaria, Auftria and Hungary, in com- ^ ^^^ **•
parifon of what it would be if any of them pof-
fefled the whole of its courfe till it falk into the
Black Sea.

CHAP. IV.

Of the Origin and Vfe of Money.

HEN the divifion of labour has been
once thoroughly eftablilhed, it is but a ,
very fmall part of a man's wants which the pro-
duce of his own labour can fupply. He fupplies
the far greater part of them by exchanguig that
furplus part of the protjuce of his own labour,
which is over and above his own confumption,
for fuch parts of the prpduce of other men's la-
bour as he has occafion for. Every man thus
lives by exchanging, or becomes in fome mea-
fure a merchant, and the fociety itfclf grows to
be what is properly a commercial fociety.

But when the divifion of labour firft began to
take place, this power of exchanging muft fre-
quently have been very much clogged and em-
barrailed in its operations. One man, we fhall
fuppofe, has more of a certain commodity than
he himfelf has occafion for, while another has
lefs. The former confequently would be glad to
difpofe of, and the latter to purchafe, a part of
this fuperfluity. But if this latter fhould chance
to have nothing that the former ftands in ijced
of, no exchange can be made betwequ them.

Vol. I. D The

34; THE NATURE AND CAUSES OF

BOOK The butcher has more meat in his Ihop than he
himfclf can confume, and the brewer and the
baker would each of them be willing to purchafe
a part of it. But they have nothing to offer in^
exchange, except the different produftions of
their refpeftive trades, and the butcher is already
provided with all the bread and beer which he
has immediate occafipn for. No exchange can,
in this cafe, be made between them. He cannot
be their merchant, nor they his cuftomersj and
they are all of them thus mutually lefs fervice-
able to one »iother. In order to avoid the in-
conyeniency of fuch fituations, every prudent
man irr every period of fociety, after the firft
eftablilhraent of the divifion of labour, muft na-
turally have endeavoured to manage his affairs in
fiich a manner, as to have at all times by him,
hefides the; peculiar produce of his own induftry,
a certain: quantity of fome one commodity or
other, fuch as he imagined few people would be
likely to refufe in exchange for the produce of
their induflry.

Many different commodities^ it is probable.
Were fuccefTively both thought of and employed
for this purpofe. In the rude agQS of fociety,
cattle are faid to have been the common inftru-
ment of commerce i and, though they muft have
been a moft inconvenient one, yet in old times
we find things were frequently valued according
tp the nunaber of cattle which had been given in
exchange for them. The armour of Diomede,
fays Homer, coft only nine oxeni but that Qjf
Glaucus coft an^ hundred oxen. Salt is faid to

!
^1

THE WEALtla" OJ?' NAtfONS. j^

be thd eomrhoh inWfument' of commerce? ahd ex-^ ^ ?v^^'
changes ifiAbyffinia; a Ipecics' of fhclls m fomc
parts^ of the coaft of India; dried cod at New-
foundland; tobacco in Virginia; fiigar in {om6
of our Weft India colonies-; hides or drefled lea-
ther in fome other countries; and there is at this
day a' village in Scotland where it is not uncofTi7 ^
mon, i atm told, for a worknian to carry nails in-
ftead of nnoney to" the baker's fhop or thfe afc-
houfe.

In all cooatries, however, fneA feem at laft td
have been determined by irrefiftible realbiis t6
give the preference,^ for tMs employnient, to me-
tak above every other commodify* Metals can
not only be kept with as little lofs as* any other
coinmodity,' lcarc« aiiy tiling being lefs perifh^
able th^' they aire, bat they can iikewife, >^ith^
out any lofsy be divided intfo any number of
parts, as by ftifion th<yfe parts can eafily be re^
united again; a quality which no other equally
dur^le . comrnoditics poflfefs, and which more
than any other quality renders them fit to be the
iriftrtimehts of comni^rcie tod circulation. The
man v^ho wanted to buy fak, for exarfiple, and
had nothing but cattle to give in exchange for
it, liiuft have been obliged • to buy fait to the
value of a whole ox, or a whole fh^p, at a time.
He c6uld feldom buy tefs than this, becaufe
what he was to give for it could feldom be di-
vided without lofs ; and If he had a ndind to
buy more, he muft, for the fame .reafons, have
been obliged to buy double or triple the quan-
tity, the value, to wit, of two or three oxen, or

Da of

36 THE NATURE AND CAUSES OP

B o o K Qf two or three fheep. If, on the contrary, in-
ftead of fheep or oxen, he had metals to give in
exchange for it, he could eafily proportion the
quantity of the metal to the precife quantity of
the commodity which he had immediate occa-
fion for.

Different metals have been made ufe of by
different nations for this purpofe. Iron was the
common inftrument of commerce among the an-
tient Spartans; copper among the antient Ro-
mans; and gold and filver among all rich and
commercial nations.

Those metals feem originally to have been
made ufe of for this purpofe in rude bars, without
any ftamp or coinage. Thus we are told by
Pliny *, upon the authority of Timasus, art an-
tient hiftorian, that, till the time of Servius Tul-
lius, the Romans had no • coihed money, but
m^e ufe of unftampcd bars of copper, to pur-
chafe whatever they had occafion for. Thefe
rude bars, therefore, performed at this time the
function of money.

The ufe of metals in this rude ftate was at-
tended with two very confiderable inconvenien-
cies; firft, with the trouble of weighing; and,
fecondly, with that of aflaying them. In the
precious metals, where a fmall difference in the
quantity makes a great difference in the value,
even die bufinefs of' weighing, with proper exaft-
nefe, requires at leaft very accurate weights and
fcales. The weighing of gold in particular is an

^ Plin. Uifi. Nat. lib* 33. icap. ^.

operation

THE WEALTH OF NATIONS. 37

operation of fome nicety. In the coarfer metals, chap.
indeed, where a fmall error would be of little
confequence, lets accuracy would, no doubt, be
neceffary. Yet we fhould find it exceffively
troublefonae, if every tintie a poor man had oc-
cafion either to buy or fell a farthing's worth
of goods, he was obliged to weigh the far-
thing. The operation of affaying is ftill more
difficult, ftill more tedious, and, unlefs a part
of the metal is fairly melted in the crucible,
with proper diflblvents, any conclufion that
can be drawn from it, is extrerriely uncertain.
Before the inftitution of coined money, how-
ever, unlefs they went through this tedious
and difficult operation, people muft always
have been liable to the groffeft frauds and
impofitions, and inftead of a pound weight of
pure filver, or pure copper, might receive in ex-
change for their goods, an adulterated compofi-
tion of the coarfeft and cheapeft materials, which
liad, however, in their outward appearance, been
inade to refcmble th6fe metals. To prevent
fuch abufes, to facilitate exchanges, and thereby
to encourage all forts of induftry and commerce,
it has been found neceffary, in all countries that
have made any confiderable advances towards
improvement, to affix a public ftamp upon cer-
tain quantities of fuch particular metals, ^ as were
in thofe countries commonly made ufe of to pur-
chafe goods. Hence the origin of coined mo-
hey, and of thofe public offices called mints;
inftitutions exactly of the fame nature with thofe
of the aulnagers and ftampmafters of woollen

D 3 and

$B THE NATURE ANP CAUSES OF

■

B .o o K and linen doth. All of tiysm are equally m^aM
to afcert^in, by njeans pf a public ft^^nnp, the
quantity and uniforni goodnefs of thoic difFereiit
comoiodities when brought to qiarket.

The firft public flumps of thijs kind that w.ere
a4ixe4 to the current naetals, feem in o^any cafes
to have been intended to afcertgiix, what it was
both moft difficult and moft important to afcer-
t^in, the goodnefs or finenefs of the metal, and
to have refembled the fterling mark which is.
at prefent affixed to plate and bu^ of filver, or
the Spanifli mark which is fometimes affixed to
ingots pf gold, and . which being ftruck only
vpon one fide of the piece, and not covering
t^e whole furface, afcertains the finenefs, but not
tjie weight of the metaj. • Abraham weighs to
Ephron the four hundred ihekels of filver which
he had agreed to pay for the field of Machpelah.
They are faid however to be the current money>
of the merchant, and yet are received by weight
^nd not by tale, in the fame manner ^$ ii^gots of
gpld and bars o.f filver are nt prefent. The re-
venues of the antient Saxon kings of £jQ\gkod
^rje faid to have been^paid, not in money but in
kind, that is, in victuals and provifions of all
forts. William the conqueror introduced the
cuftom of paying them in money. This mo^ey,
however, was, for a long time, received at the
exchequer, by weight and not by tale.

The inconvcniency and difficulty of weighing
thojfe inetals with exaftnefs gave occafion to the
inftitution of coins, of which the ftamp, covering
entirely bpth fides of the piece and fooKtimca

the

THE WEALTH OF NATIONS. 39

the edges too, was fuppofed to afccrtain not only c h^ p«
the finenefs, but the weight of the metal. Such
coios, tKerefore, were received by tale as at pre-
fcnt, without the trouble of weighing.

The denominations of thofe coins feem ori-
ginally to have expreffed the weight or quantity
of metal contained in them. In the time of
Servius TuUius, who firft coined money at ,
RonK, the Roman As or Pondo contained a
Roman pound of good copper. It was divided
in the fame manner as our Troyes pound, into
twelve ounces, each of which contained a real
ounce of good copper. The Englifh pound
fterling in the time of Edward I., contained a
pound. Tower weight, of filver of a known fine-
nefs. The Tower pound feems to have been
fomething more than the Roman pound, and
fomething lefs than the Troyes pound. This
laft was not introduced into the mint of England
^tilh the 1 8th of Henry VIII. The French livr«
contained in the time of Charlemagne a pound,
Troyes weight, of filver of a known finenefs.
The fair of Troyes in Champaign was at that
time frequented by all the nations of Europe,
and the weights and meafures of fo famous a
market werc^ generally known and efteemed.
The Scats money pound contained, from the
time of Alexander the Firft to that of Robert
Bruce, a pound of filver of the fame weight and
finenefs with the Englifh pound fterling. Eng-
!ilh, French, and Scots pennies too, contained
all of them originally a real pennyweight of filver,
the twentieth part of an .ounce, and the two-

D 4 hundred-

40 THE NATURE AND CAUSES OF

BOOK hundrcd-and-fortieth part of a pound. The Ihil-
ling too feems originally to have been the deno-
mination of a weight. fVhen wheat is at twelve
Jhillings the quarter^ fays an antient ftatute of
Henry III. then waft el bread of a farthing ftjall
weigh eleven fl)illings and four pence. The pro-
portion, however, between the Ihilling ^nd either
the penny on the one hand, or the pound on the
other, feems not to have been fo conftant and
uniform as that between the penny and the
pound. During the firft race of the kings of
France, the French fou or fliilling appears upon
different occafions to have contained five, twelve,
twenty, and forty pennies. Among the antient
Saxons a Ihilling appears at one time to have
contained only five pennies, and it is not impro-
bable that it may have been as variable among
them as among their neighbours, the antient
Franks. From the time of Charlemagne among
the French, and from that of William the Con-
queror among the Englifh, the proportion be-
tween the pound, the (hilling, and the penny,
feems to have been uniformly the fame as at pre-
fent, though the value of each has been very dif-
ferent. For in every country of the world, I
believe, the avarice and injuftice of princes and
fovereign ftates, abufing the confidence of their
fubjefts, have by degrees diminiftied the real
quantity of metal, which had been originally
contained in their coins. The Roman As, in the
latter ages of the Republic, was reduced to the
twenty-fourth part of its original value, and, in-
ftead of weighing a pQund, came to weigh only

half

THE WEALTH OF NATIONS. 41

half an ounce. The Englilh pound and penny ^ ^^ **•
contain at prefent about a third only ; the Scots
pound and penny about a thirty-fixth ; and the
French pound and penny about a fixty-fixth part
of their original value. By means of thofe
operations the princes and fovereign ftates which
performed them were enabled, in appearance, to
pay their debts and to fulfil their engagerrtents
with a fmaller quantity of filver than would
otherwife have been requifite. It was indeed in
appearance only; for their creditors were really
defrauded of a part of what was due to them.
All other debtors in the ftate were allowed the
fame privilege, and might pay with the fame
nominal fum of the new and debafed coin what-
ever they had borrowed in the old. Such ope-
rations, therefore, have always proved favourable
to the debtor, and ruinous to the creditor, and
have fometimes produced a greater and more
univerfal revolution in the fortunes of private
perfons, than could have been occafioned by a
very great public calamity.

It is in this manner that money has become
in all civilized nations the univerfal inftrument of
commerce, by the intervention of which goods
of all kinds are bought and fold, or exchanged
for one another.

What are the rules which men naturally ob-
ferve in exchanging them either for money or for
one another, I fhall now proceed to examine.
Thefe rules determine what may be called the
relative or cjcchangeablc value of goods.

The

42 THE NATURE AND CAUSES OF

B OO tL Tjjb ^Qrd YALvz, it is to be ohferved. has

v^-y — > two different meanings^ and Ibmetimes cjpveBcs
the utility of fonie particular objed, and ibtne-
' times the power of purchafing other goods which
the pofleffion of that objeft conveys. The one
may be called " value in ufe ;" the other, " value
^' in exchange/' The things which have the
greatefl value in ufe have frequently. little or no
value in exchange > and on the contrary, thofe
which have 'the greatefl value in exchange have
frequently little or no value in ufe* Nothing is
more ufeflil than water: but it will purchafe
fcarce any thing; icarce any thing can be had
in exchange for it. A diamond, on the con-
trary, has icarce any value in ufe; but a very
great quantity of odier goods may frequently be
had in exchange for it.

In order to inveftigate the principles which
regulate the exchangeable value of commodities,
I ihall endeavour to (hew,
V First, what is the real meafure of this ex-

changeable value; or, wherein confifts the real
price of all commodities.

Secondly, what are the different parts of
which this real price is compofed or made up.

And, laflly, what are the different circum-
ftances which fometimes raife fbme or all of
thefe different parts of price above, and fome-
jimes fink them below their natural or ordinary
rate; or, what are the caufes which fometimes
hinder the market price, that is, the actual price
of commodities, from coinciding exadly with
ifvhat may be called their natural price,

9 I SHALL

TIffi WEALI^ OF NATIONS. 43

I s^ALL €iideayaur tp eixplain, as fully wd ^ "y^^*
diitindUy a$ I can, ,thole three fubje£U iq the
three following chapters, for which I muft very
earneftly eatreat both the patience and attention
of the reader : his patience in order to examine
a deitail wh^c^ rnay perhaps iia ipme places ap-
pear unaeceCarily tedious; and his atitention in
order to underftand what may, perhaps, afte:r
the fulieft explication which I am capable of
giving of it,^ appear ftiU in &>m€ degree obicure.
I am alway3 willing to run ibme hazard of being
tedioys in order to be fure that I am peHpicuous ;
and after taking the i^tmoift paiins that I can to
be perfpicuous, forae obfcwrky may ftill appear
to remain upon a fubjeft in its own nature ex-
tremely abftradtcd.

•*—•*••

CHAP. V.

Of the real and nominal F rite of Commodities^ ^r
of their Price in Lai^ur, and their Price in
Money.

Tr> VERY man is rich or poor according to
X-^ the degree in which he can afford to enjoy
the neccffaries, conveaiencies, and amufements
(tf human life. But after the divifion q£ labour
has once thoroughly taken place, it is but a very
fmall part of thefe with which a man's own la-
bour can fi^pply him. The far greater part of
them he muft derive from the labour of other

people,

44 THE NATURE AND CAUSES OF

BOOK j}eoplc, and he muft be rich or poor according
to the quantity of that labour which he can
comnnand, or which he can afford to purchafe.
The value of any commodity, therefore, to the
perfon who poffefles it, and who means riot to
ufe or confume it himfelf, but to exchange it
for other commodities, is equal to the quantity
of labour which it enables him to purchafe or
command. Labour, therefore, is the real mea-
fure of the exchaogeable value of all commodities.
The real price of every thing, what every thing
really cofts to the man who wants to acquire it,
is the toil and trouble of acquiring it. What
every thing is really worth to the man who has
acquired it, and who wants to dilpofe of it or
exchange it for fomething elfe, is the toil and
trouble which it can fave to himfelf, and which
it can impofe upon other people. What is
bought with money or with goods is purchafed
by labour, as much, as what we acquire by the
toil of our own body. That money or thofe
goods indeed fave us this toil. They contain
the value of a certain quantity of labour which
we exchange for what is fuppofed at the time to
contain the value of an equal quantity. ^ Labour
was the firft price, ^ the original purchafe- money
that was paid for all things. It was not by gold
or by filver, but by labour, that all the wealth of
the world was originally purchafed ; and its valuef
to thofe who poffefs it, and who want to ex-
change it for fome new produftions, is precifely
equal to the quantity of labour which it can
enable them to purchafe or command.

Wealth,

THE WEALTH OF NATIONS. 45

Wealth, as Mr, Hobbes fays, is powen But ^ ^^ ^*
the perlbn who either acquires, or fucceeds to a
great fortune, does not neceffarily acquire or
fucceed to any political power, either civil or
military. His fortune may, perhaps, afford hina
the means of acquiring both, but the mere
pofleflipn of that fortune does not neceflarily
convey to him either. The power which that
pofleffion immediately and direftly conveys to
him, is the power of purchafing ; a certain com-
mand over all the labour, or over all the produce
of labour which is then in the market. His for-
tune is greater or lefs, precifely in proportion to
the extent of this power; or to the quantity
either of other men's labour, or, what is the
fame thing, of the produce of other men's
labour, which it enables, him to purchafe or
command. The exchangeable value of every
thing muft always be precifely equal to the extent
of this power which it conveys to its owner.

But though labour be the real meafure of the
exchangeable value of all commodities, it is not
that by which their value is commonly eftimated.
It is often difficult to afcertain the proportion
between two different quantities of labour.' The
time (pent in two different forts of work will not
always alone deterniine this proportion. The
different degrees of hardfhip eadured, and of
ingenuity exercifed, muft likcwife be taken into
account. There may be more labour in an
hour's hard work than in two hours eafy bufinefs 5
or in an hour's application to a trade which
it OQ& ten years labour to learn, thao in a

month's

46 THE NATURE AND CAUSES OF

•

* ^j^^ month's irtdxj(try at aii ordmary aitd obvious
employment. But it is not eafy to find any ac-
curate meafure citlier of hardftiip or ingenuity,
lit exchanging indeed the diflferent produftions
of difFerertt forts of labour for one another, fome
allowance is commonly made for both. It is
^djufted, however, not by any accurate meafure,
but by the higgling and bargaining of the mar-
feet, according to that fort of rough equality
which, though not exaft, is fufficient for carrying
bn the bufinefs of common life.

Every commodity befides, is more frequendy
exchanged for, and thereby compared with,
othci? commodities than with labour. It is more
natural therefore, to eftimate its exchangeable
value by the quantity of fome other commodity
than by that of the labour which it can purchafe.
The greater part of people too* underftand better
what is meant by a quantity of a particular com-
modity,^ than by a quantity of labour. The one
is a plain palpable objedt; the other an abftraft
notion, which, though it can be made fufEciently
intelligible, is not altogether fo natural and
obvious.

But when barter ceafes, and money has become
the cornmon inftrument of commerce, every
particular commodity is mpre frequently ex-
changed ,for money than for any other commo-
dity. The butcher feldom carries his beef S
,his niutton to the baker, or the brewer, in order
to exchange them for bread or for beer y but he
carries them to the. market, where he exchanges

them for money, and afterwards exchanges that

money

THE WEALTH OP NATIONS. 47

money for bread and for beer. The quantity ^ ^^ ^'
of mpney which he gfets for them regulates too
the quantity of bread and beer which he can after-
wards purchafe. It is more natural and obvious
ta him, dierefore, to eftimate their value by the
quantity of jnoney, the commodity for which he
immediately exchanges them, than by that of
bread and beer, the commodities for which he
can exchange them only by the intervention of
toother commodity; and rather to fay that his
butcher's meat is worth threepence or fourpence
a pound, than that it is worth three or four
pounds of bread, or three or four quarts of fmall
beer. Hence it comes to pafs, that the ex-
changeable value of every commodity is m\)rc
frequently eftimated by the quantity of money,
than by the quantity either of labour or of
any other commodity which can be had in exj.
change for it.

Gold and filver, however, like every other
commodity, vary in their value, are fometimes
cheaper and fometimes dearer, fometimes of eafier
and fometimes of more difficult purchale. The
quantity of labour which any particular quantity
of them can purchafe or command, or the quan-
tity of other goods which it will exchange for,
depends always upon the fertility or barrcnnefs
of the mines which happen to be known about
^e time when fuch exchanges are made. The
difcovery of the abundant mines of America
reduced-, in the fixteenth century, the value of
gold and filver iri Europe to about a third of
what it had been before; As it coft lefs labour

48 THE NATURE AND CAUSES OF

B 0^0 K to bring thofe metals from the mine to the

market, fo when they were brought thither they

could purchafe or command lefs labour; and

this revolution in their value, though perhaps

the greateft, is by no means the only one of

which hiftory gives fome accqunt. But as a

meafure of quantity, fuch as the natural foot,

fathom, or handful, which is continually varying

in its own quantity, can never be an accurate

meafure of the quantity of other things; fo a

commodity which is itfelf continually varying

in its own value, can never be an accurate

meafure of the value of other commodities.

Equal quantities of labour, at ^11 times and

places, may be faid to be of equal value to the

•labourer. In his ordinary ftate of health, ftrength

and fpirits ; in the ordinary degree of his fkill

and dexterity, he muft always lay down the fame

portion of his eafe, his liberty, and his happi-

nefs. The price which he pays muft always be

the fame, whatever may be the quantity of goods

which he receives in return for it. Of thefe,

indeed, it may fometimes purchafe a greater and

fometimes a fmaljer quantity; but it is their

value which varies, not that of the labour which

purchafes them. At all times and places that is

dear which it is difficult to come at, or which it

cofts much labour to acquire; and that cheap

which is to be had eafily, or wth very little

labour. Labour alone, therefore, never varying

in its own value, is alone the ultimate and real

ftandard by which the value of all commodities

can at all times and places be eftimated and

compared*

THE WEALTH OF NATIONS. 49

compared. It is their real price ; money is their ^ " ^ p.
nominal price only.

But though equal quantities of labour are al-
ways of equal value to the labourer, yet to the
perfon who employs him they appear fometimes
to be of greater and fometimes of fmaller value.
He purchafes them fometimes with a greater and
fometimes with a fmaller quantity of goods, and
to him the price of labour feems to vary like that
of all other things. It appears to him dear in
the one cafe, and cheap in the other. In reality,
however, it is the goods which are cheap in the
one cafe, and dear in the other.

In this popular fenfe, therefore, labour, like
commodities, may be faid to have a real and a
nominal price. Its real price may be faid to
confift in the quantity of the neceffaries and con-
veniences of life which are given for it; its no-
minal price, in the quantity of money. The
labourer is rich or poor, is well or ill rewarded,
in proportion to the real, not to the nominal
price of his labour.

The diftinftion between the real and the no-
minal price of commodities and labour, is not
a matter of mere fpeculation, but may fometimes
be of confiderable ufe ia praftice. The fame
real price is always of the fame value; but on
account of the variations in the value of gold
and filver, the fame nominal price is fometimes
of very different values. When a landed eftate,
therefore,^ is fold with a refervation of a perpe-
tual rent, if it is intended that this rent Ihould
always be of the fame value, it is of importance

Vol. I. E to

50 THE NATtTRE AND CAUSES OF

9 o o K to ^hc family in whofc favour it is referved, that
it Ihould not confifl: in. a particular fum of money#
Its value would in this cafe be liable to varia-
tions of two different kinds ; firft, to thole which
arife from the different quantities of gold and
filver which are contained at different times in
coin of the fame denomination;- and, fecondiy,
to thpfe which arife from the different values of
equal quantities of gold and filver at different
times.

Princes and fovereign fiates have frequently
fancied that they had a temporary interefl to di-
minifh the qtvantity of pure metal contained in
their coins j but they feldom have fancied that
they had any to augment it. The quantity of
metal contained in the coins, I believe of'^^ll
nations, has, accordingly, been almoft continu-
ally diminifhing, and hardly ever augmenting.
Such variations therefore tend almofl always ta
^iminifh the value of a money rent.

The difcovery of the mines of America dimi-
nifhed the value of gold and filver in Europe^
This diminution^ it is commonly fuppofed, though
I apprehend without any certain proof, is flilP
geing on gradually, and is likely to continue to-
do fo for a long time.* Upon this fuppofition,
dierefore, fuch variations are more likely to di-
rninifh^ . than to augment the value of ar money
ront, even though it fhould be ftipulated to' be
paid, not in fuch a quantity of coined money ,of
fuch a denomination (in fo many pounds flerling,
for example), but in fo many ounces either of
pure filver, or of filver of a certain- ftandard.

The-

THE WEALTH OP NATIONS, '51

Tni rents \Vhich have been referved in corn ^ ^^^ ^•
have preferved their value much better than thofe
which have been referved in money, even where
the denomination of the coin has not been altefedi
By the i8th of Elizabeth it was enafted. That
a third of the rent of all college leafes ftiould
be referved in corn/ to be paid, either in kind j
or according to the current prices at th^ neareft
public market. The money arifing from this
corn rent, though originally but a third of the
whole, is in the prefeqt times, according to
Doftor Bkckftone, commonly near double of
what arifes from the other two-thirds. The old
money rents of colleges muft, according to this
account, have funk almoft to a fourth part of
their ancient value,- or are worth little more
than a fourth part of the corn which they were
formerly worth. But fince the reign of Philip
and Mary the denomination of the EngKfh coin
has undergone little or no alteration, and the
fame number of pounds, fhillihgs and pence have
cfiht^ncd very nearly the fame quantity of pure
filver. This degradation, therefore, in the value
of the money rents of colleges, has arifen alto-
gether from the degradation in the value of
filver.

When the degradation in the value of filver
is combined with the diminution of- the quantity
of it contained in the coin of the fame denomi-
nation, the lofs is frequently ftill greater. In
Scotland; where the denomination of the coin
has undergone^ much greater alterations than it
ever did in England, and in France, where it has

E 2 under-

BOOK

52 THE NATURE AND CAUSED OF

undergone ftill greater than it ever did in Scot-
land, fome ancient rents, originally of confider-
able value, have in this manner been reduced
almoft to nothing.

EoiTAL quantitiies of labour will at diftant times
be purchafed more nearly with equal quantities
of corn, the fubfiftence of the labourer, than
with equal quantities of gold and (ilver, or per-
haps of any other commodity. Equal quan-
tities of corn, therefore, will, at diftant times,
be more nearly of the fame real value, or enable
the poflelTor to purchafe or command more
nearly the fame quantity of the labour of other
people. They will do this, I fay, more nearly
than equal quantities of almoft any other com-
modity; for even equal quantities of corn will
not do it exaftly. The fubfiftence of the la-
bourer, or the real price of labour, as I fliall
endeavour to fhow hereafter, is very different
upon different occafions; more liberal in a fo-
ciety advancing to opulence, than in one that is
ftanding ftill} and in one chat is ftanding ftiil^
than in one that is going backwards. Every
other commodity, however, will at any particular
time purchafe a greater or fmaller quantity of
labour in proportion to the quantity of fubfift-
ence which it can purchafe at that time. A
rent therefore referved in coi^ is liable only to
the variations in the quantity of labour which a
certain quantity of corn can purchafe. But a
rent referved in any other commodity is liable,
not only to the variations in the quantity of la-
bour which any particular quantity of corn can

purchafe.

■r

THE WEALTH OF NATIONS. 53

purchafe, but to the variations in the quantity of ^ ^^^ ^'
corn which can be purchafed by any particular
quantity of that commodity.

Though the real value of a corn rent> it is to
be obferved however, varies much lefs from cen-
tury to century thaff that of a money rent, it
varies much more from year to year. The
money price of labour, as I fhall endeavour to
fhow hereafter, does not fluftuate froni year to
year with the money price of corn, but feems to
be every where accommodated, not to the tem-
porary or occafional, bu|: to the average or ordi-
nary price of that neceflary of life. The average
or ordinary price of corn again is regulated, as
I Ihall likewife endeavour to ftiow hereafter, by
the value of filver, by the richnefs or barrennefs
of the mines which fupply the market with that
metal, or by the quantity of labour which muft
be employed, and confequcntly of corn which
muft be confumed, in order to bring any parti-
cular quantity of filver from the mine to the
market. But the value of filver, though it fome-
times varies greatly from century to century,
feldom varies much ftom year to year, but fre- ^
quently continues the fame, or very nearly the
fame, for half a century or a century together.
The ordinary or average money price of corn,
therefore, may, during fo long a period^ con-
tinue the fame or very nearly the fame too, and
along with it the money price of labour, pro-
vided, at leaft, the fociety continues, in other
refpefts, in the fame or nearly in the fame con-
dition. In the mean time the temporary and

E 3 occa-

54 THE NATURE AND CAUSES OF

B o^o K occafional price of corn may frequently be dou-
ble, one year, of what h had been the year be-
fore, or fluftuate, for example, from five and
twenty to fifty (hillings the quarter. But when
corn is at the latter price, not only the nominal,
but the real value. of a corn rent will be double
6f what it is when at the former, or will com-
tTiand double the quantity either of labour or of
the greater part of other commodities 5 the money
price of labour, and along with it that of moft
other things, continuing the fame during all thefe
fluftgations.

Labour, therefore, it appears evidently, is
the only univerfal, as well as the only accurate
meafure of value, or the only ftandard by whicl^
we can compare the values of different commo-
dities at all times and at all places. We cannoc
cftimate, it is allqwed, the real value of different
commodities from century to century by the
quantities of filver which were given for them.
We cannot eftimate it from year to year by the
quantities of corn. By the quajitities of labour
we can, with the greateft accuracy, eflimate it
both from century to century and fi-om year to
year. From century to. century, corn is a better
meafure than filver, becaufe, from century to.
century, equal quantities of corn ^ill command
the fame quantity of labour moje nearly thari
equal quantities of filver. Frqm year ta year,
on the contrary, filver is a better meafure thaa
corn, bec^fe equal quantities of it wUl more
nearly command the fanpe quantity of labour.

But

THE WEALTft OF NATIONS* '^ ' 5j

But though in eftablifhing perpetual rents, c ft a i*.
Of even in letting very long leafes, it may be of
ufc to diftinguilh between real and nominal
price i it is of none in buying and felling, the
more common and ordinary tranfaftions of hu-
man life,

At the fame time and place the real and th^
nominal price of all commodities are exaftly in
proportion to one another. The more or left
money you get for any commodity, in the Lon-
don market,, for example, the more or lefs la-
bour it will at that time and place enable you to
purchafe or command. At the fame tirxie and
place, therefore, money is the exaft me^fure of
the real exchangeable value of all commodities.
It is fo, however, at the fame time and place
only.

Thouch at diftant places, there is no regulaf
proportion between the real and the money price
of commodities, yet the merchant who carries
goods from the one to the other has nothing to
confider but their money price, or the difference
between the quantity of filver for which he buys
them, and that for which he is likely to fell
them. Half an ounce of filver at Canton in
China may command a greater quantity both of
labour and of the neceflaries and convenii*nces of
life, than an ounce at London. A commodity,
therefore, which fells for half an ounce of filver
^t Canton may there be really dearer, of wort
real importance to the man who poffeffes it there,
than a commodity ^hich fells for an ounce at
LrOndon ig to th« cnan who poffefTes- it zt Lon-

E 4 ' don.

56 • * THE NATURE AND CAUSES OF

BOOK don. If a London merchant, however, can buy
at Canton for half an ounce of filver, a commo-
dity which he can afterwards fell at London for
an ounce, he gains a hundred per cent, by the
bargain, juft as much as if an ounce of filver
was at London exadtly of the fame value as at
Cantoq. It is of no importance to him that half
an ounce of filver at Canton would have given
him the command of more labour and of a
greater quantity of the neceffaries and conve-
niences of life than an ounce can do at London.
An ounce at London v/ill always give him the
command of double the quantity of all thefe,
which half an ounce could have done there, and
this is precifely what he wants.

As it is the nominal or money price of goods,
therefore, which finally determines the prudence
or imprudence of all purchafes and fales, and
thereby regulates almoft the whole bufinefs of
common life in which price is concerned, we
cannot wonder that it fliould have Jbeen fo much
more attended to than the real price.

In -fuch a work as this, however, . it may fome-
tinoies be of ufe to compare the difitrent real
values of a particular commodity at different
times and places, or the different degrees of
power, over the labour of other people which it
may, upon different occafions, have given to
thofe who pofTefTed it. We muft in this cafe
compare, not fo much the different quantities of
filver for which it was commonly fold, as the
different quantities of labour which thofe dif-
ferent quantitifs^ of filver could have purchafed.

But

THE WEALTH OF NATIONS.

But the current prices of labour at diftant times ^^^ **•
and places can fcarce ever be known with any
degree of exaftnefs. Thofe of corn, though
they have in few places been regularly re-
corded, are in general better known and have
been more frequently taken notice of by hifto-
rians and other writers. We muft generally,^
therefore, content ourfelves with them, not as*
being always exactly in the fame proportion as.'
the current prices of labour, but as being the
neareft approximation which can commonly be
had to that proportion. I fhall hereafter halve
Qccafion to make feveral comparifons of this
kind.

In the progrefs of induftry, commercial na-
tions have found it convenient to coin feveral
different metals into moneys gold for larger pay-
ments, filver for purchafes of moderate value,
and copper, or fome other coarfe metal, for
thofe of ftill fmaller confideration. They have
always, however, confidered one of thofe metals
as more peculiarly the meafure of value than
any of the other two ; and this preference feems
. generally to have been given to the metal which
they happened firft to make ufe qf as the in-
ftrument of commerce. Having once begun to
ufe it as their ftandard, which they muft have
4one when , they had no other money, they have
generally continued to do fo even when the ne-
ceflity was not the fame.

The Romans are faid to have had nothing but
copper money till within five years before the

firft

tn THE NATURE AND CAUSES OF

BOOK firft Punic war *, when they firft began to coin
filvcr. Copper, therefore, appears to have con-
tinued always the meafure of value in that re-
public. At Rome all accounts appear to have
been kept, and the value of all eftates to have
been computed, ^either in ^Jej or in Sejiertiu
The As was always the denomination of a copper
coin* The word Sejiertius fignifies two Affes and
a half* Though the SfftertiiUy therefore, was
originally a filver coin, its value was eftimated in
copper. At Rome, one who owed a great deal
of money, was laicj to have ^ great deal of other
people's copper. ' .

The northern nations who eftablifhed them--
(elves upon the ruins of the Roman empire, fecn>
to have had filver money from the firft beginning
of their fettlements, and not to have known
cither gold or copper coins for feveral ages there-
after. There were filver coins in England in the
time of the Saxons; but there was little goki
coined till the time of Edward III. nor any cop-
per till that of Janfies I. of Great Britain^ Irx
England, therefore, and for the fame reafon, I
believe, in all other modern nations of Europe^i
a}} accounts are kept, and the value of all goods
and of all eftates is generally computed in filver ;-
and when we mean to exprefs the amount of 21
perfon's fortune, we feldom mention the number
of guineas, but' the number of pounds fterling.
which we fuppofe would be given for it.

♦ PIx«y, lifi, xx-xiii. c, 3.

THE WEALTH OF NATIONS. 59

Originally, in all countries, I believe, a k- ^ " ^ ^
,gal tender 'of payment could be rnade only in the
coin of that metal, which was peculiarly con-
fidered as the ftandard or meafure of value. In
England, gold was not confidered as a legal ten-
der for a long time after it was coined into mo-
ney. The prpporiion between the values. of gold
and iilver money was not fixed by any public
law or proclamation s but was left to be fettled
by the market. If a debtor oflfcred payment ir^
gold, the creditor might either rejcdt fuch pay-*
ment altogether, or accept of it at fuch a valu*
ation of the gold as he and hi$ debtor could agree
upon. Copper is not at prefent a legal tender,
except in the change of the fmaller Elver coins.
In this ftate of things the diftinftion between the
metal which was die ftandard, and that which
was not the ftandard, was fomething more than
$, nominal diftinflion.

In proceis of time, and as people became
gradually more familiar with the ufc of the dif-
ferent metals in coin, and confequently better
acquainted with the proportion between their re-
fpeftive values, it has in moft countries, I bcw
lieve, been found convenient to afcertain thw
proportion, and to declare by a public law that
a guinea, for exa/mple, of fuch a weight and
finenefs, Ihould exchange for oner-and- twenty
Ihillings, or be a legal tender for a debt of that
amount. In this ftate of things, and during the
pontuiuance of any one regulated proportion of
this kind, the diftinftion betweea the metal
which is the ftandard, and that which is- not the

ftandard^

6o THE NATURE AND CAUSES OF

BOOK ftondard* becomes little more than a nominal
diftinAion.

In confequence of any change, however, in
this regulated proportion, this diftin£tion be-
comes, or at leaft leems to become, fomething
more than nominal again. If the regulated
value of a guinea, for example, was either re-
duced to twenty, or raifed to two-and-twenty
(hillings, all accounts being kept and almoft all
obligations for debt being exprefied in lilver
money, the greater part of payments could in
either caie be made with the fame quantity of
lilver money as hctore; but would require very
different quantities of gold money ; a greater in
the one cafe, and a fmaller in the other. Silver
would appear to be more invariable in its value
than gold. Silver would appear to meafure the
value of gold, and gold would not appear to
meafure the value of filver. The value of gold
would feem to depend upon the quantity of filver
which it would exchange for^ and the value of
filver would not feem to depend upon the quan-
tity of gold which it would exchange for.
This difference, however, would be altogether
owing to the cuftom 6f keeping accounts, and of
expreffing the amount of all great and fmall fums
rather in filver than in gold money. One of
Mr. Drummond's notes for five-and-twenty or
fifty guineas would, after an alteration of this
kind, be ftill payable with five-and-twenty or
fifty guineas in the fame manner as before. It
would, after fuch an alteration, be payable with
the fame quantity of gold as before, but with

very

THE WEALTH OP NATIONS. fii

very difFerent quantities of filvcr. In the pay- ^ h^a p*
ment of fuch a note, gdld would appear to be
more invariable in its value than filver. Gold
would appear to meafore the value of filver, and
filver would not appear to meafure the value of
gold. If the cuftom of keeping accounts, and of
expreffing promiffory notes and other obligations
for money in this manner, ihould ever beconfic
general, gold, and not filver, would be con-
fidered as the metal which was peculiarly the
ftandard or meafure of value.

In reality, during the continuance of any onq
regulated , proportion between the refpeclive va-
lues of the different metals in coin, the value
of the moft precious metal regulates the value
of the v/hole coin. Twelve copper pence con-
tain half a pound, avoirdupois, of copper, of
not the beft quality, which, before it is coined,
is feldom worth feven-pence in filver. But as by
the regulation twelve fuch pence are ordered to
exchange for a ftiilling, they are in the market
confidered as worth a (hilling, and a fliilling can
at any time, be had for them. Even before the
late reformation of the gold coin of Great Bri-
tain, the gold, that part of it at leaft which cir-
culated in London and its neighbourhood, was
in general lefs degraded below its ftandard weight
than the greater part of the filver. One- and
twenty worn and defaced fhillings, however,
were confidered as equivalent to a guinea, which
perhaps, indeed, was worn and defaced too, but
feldom fo much fo. The late regulations have
brought the gold coin as near perhaps to its
ftandard weight as it is poflible to bring the cur-
rent

6z THE NATURE ANJ) CAUS^^ OP

ret\t coin of any nation ; and the order, to receivei
no gold at the public officeis but by weight, is
likely to preferve it fo, as long as that order is
enforced. The filver coin ftill continues in th€
fame worn and degraded ftate as before the re-
formation of the gold coin* In the market, how-
ever, one-and-twenty (hillings of this degraded
filver coin are ftill confidered as worth a guinea
of this excellent gold coin.

The reformation of the gold coin has evidently
raifed the value of the filver corn which can be ex-^
changed for it.

Ii* the Englifh mint a pound weight of gold is.
coined into forty-four guineas and a half, which,
at one-and-twenty fhillings the guinea, is equal
to forty-fix pounds fourteen ftiillings and fix-
pence. An ounce of fuch gold coin, therefore, is
worth 3/. 17s. 10 Id. in filver. In England no
duty or feigrtoragc is paid upon the coinage, and
he who carries a pound weight or an ounce weight
of ftandard -gold bullion 10 the mint, gets back
a pound weight or an ounce weight of gold in
coin, without any deduftion* Three pounds
feventeen fliillings and ten-pence, halfpenny an
ounce> therefore, is faid to be the mint price of
gold in England, or the quantity of gold coin
which the mint gives in return for ftandard gold
bullion.

Before the reforraation of the gold coin, the
price of ftandard gold bullion in the market had
for many years been upwards of 3 /. ^18 j. fome-
times 3 /* 1 9 J. and very frequently 4 /. an ounce 5
that fum, it is probable, in the worn and de^

graded

THE WEALTH OP NATIONS.

graded gold coin, feldom containing more than
an ounce of ftandard gold. Since the refornnation
of the gold coin, the market price of ftandard
gold bullion feldom exceeds 3 /. 17^. 7 ^. an
ounce. Before the reformation of the goM coin,
file market price was always more or lels above
the mint price. Since that reformation, the mar-
ket price has been conftantly below the mint
price. But that market price is the fame whe-
ther it is paid in gold or in fiiver coin. The- late
reformation of the gold coin, therefore, has
raifed not only the value of the gold coin, but
likewife that of the fiiver coin in proportion to
gold bullion, and probably too in proportion to
all otlier commodities; though the price of the
greater part of other commodities being influ-
enced by fo many other caufes, the rife in the
value either of gold or fiiver coin in proportion
to tliem,' may not be fo diftinft and fenfible.

In the EngliQi mint a pound weight of ftan-
dard fiiver bullion is coined into fixty-two ftiil-
lings, containing, in the fame manner, a pound
weight of ftandard fiiver. Five fliillings and
two-pence an ounce, therefore, is faid to be the
mint price of fiiver in England, or the quantity
of fiiver coin which the mint gives in return for
ftandard fiiver bullion. Before the reformation
of the gold coin, the market price of ftandard
fiiver bullion was, upon different occafions, five
Ihilliogs and four-pence, five fliillings and five-
pence, five fliillings and fix-pence, five fliillings
and feven-pence, and very often 'five fliillings and
eight-pence an ounce. Five fliillings and feven-
8 pence.

64 THE NATURE AND CAUSES OF

* ^,^ ^ pence/ however, leems to have been the moft
common price. Since the reformation of the
gold coin, the market price of ftandard filver
bullion has fallen occafionally to five ftiillings
and three-pence, five ftiillings and four-pence,
and five ftiillings and five-pence ^ ounce, which
lafl: price it has fcarce ever exceeded. Though
the market price of filver bullion has /alien con-
fiderably fince the reformation of the gold coin,
it has not fallen fo low as the mint price.

In the proportion between the different metals
in *the Englifli coin, as copper is rated very
much above its real value, fo filver is rated fome-
what below it. In the market of Europe, in the
French coin and in the Dutch coin, an' ounce of
fine gold exchanges for about fourteen ounces of
fine filver. In the Englifti coin, it exchanges for
about fifteen ounces, that is, for more filver than
it is worth according to the common eftimation
of Europe. But as the price of copper in bars
is not, even in England, raif^d by the high price
of copper in Englifti coin, fo the price of filver
in bullion is not funk by the low rate of filver in
Englifti coin. Silver in bullion ftill preferves its
proper proportion to gold; for the fame reafon
that copper in bars preferves its proper propor-
tion to filver.

Upon the reformation of the filver coin in the
reign of William III. the price of filver bullion

fl:ill continued to be fomewhat above the mint

price. Mr. Locke imputed this high price to the
permiflion of exporting filver bullion, and to
the prohibition of exporting filver coin. This

9 . permiflion

THE WEALra OP NATIONS. «J

permiflion of exporting, he faid, rendered the c h a p.
demand for filver bullion greater than the de-
maiid for filver coin. But the number of people
who want filver coin for the common ufes of
buying and felling at hon^e, is furelymuch
greater than that of thofe who want filver bullion
dither for the ufe of exportation or for any other
ufe. There fubfifts at prcfent a like permifllon
of exporting gold bullion, and a like prohibition
of exporting gold coins and yet the price of gold
buUio^i has fallen . below the mint price* But in
the Engliih coin filver was then, in the fame man-
ner as now, under-crated in proportion to gold;
and the gold coin (which at that time too was not
(iippofed to require any reformation) regulated
then, as well as now, the real value of the whole
coin. As the reformation of the filver coin did
not then reduce the price of filver bullion t6 the
mint price, it is not very probable that a like re-
formation will do fo now.

Were the filver coin brought back as near to
its fi:andard weight as the gold, a guinea, it is
probable, would, according to th^ prefent pro-
portion, exchange for more filver in coin than
it would purchaie in bullion. The filver con-
taining its foil flsindard weight, there would in
this cafe be a profit in melting it down, in order,
firft, to fell the bullion for gol^ coin, and after-
wards to exchange this gold coin Yor filver coin
to be melted down in the fame manner. Some
alteration in the prefent proportion feems to be
the only method of preventing this inconvc-
niency.

Vol. L F Th*

66 THE NATURE AND CAUSES OP

The inconvcnicncy perhaps would be Icfi if
filver was rated in the coin as much above its
proper proportion to gold as it is at prefent
rated below it; provided it was at the fame time
^naded that filver fhould not be a Icjgal tender
fcr more than the change of a guinea; in the
fame manner as copper is not a legal tender for
more than the change of a (hilling. No creditor
could in this cafe be cheated in confequence of
the high valuation of fdver in coin ; as no credi-
tor can at prefent be cheated in confequence of
the high valuation of copper. The bankers only^
would fuffer by this regulation. When a run
comes upon them they Ibmetimes endeavour ta
gain time by paying in fixpences, and they would
be precluded by this regulation from this difcre-
ditable method of evading immediate payment*
They would be obliged in confequence to keep
at all times in their coffers a greater quant;ity <jf
cafh than at prefent; and though this might no
doubt be a confiderable inconveniency to them^
it would at the fame time be a confiderable fecu-
rity to their creditors.

Three pounds feventeen fiiillings and ten-
pence halfpenny (the mint price of gold) cer-
tainly does not contain, even in our ^prefent ex-
cellent gold coin, more than an ounce of ftan-
dard gold, and it may be thought, therefore^
fliould not purchafe more ftandard bullion* But
gold in coin is oiore convenient than gold in
bullion, and though, in England, the coinage is
free, yet the gold which is carried in bullion to
the mint, can feldom be returned in coin.to.thi?

/ owner

ThS Wealth op nations. e?

0#rter till after a delay of* fcveral weeks* In the ^ ^ ^ p.
prefent hurry of the mint, it could not be re-
turned till after a delay of feveral months. This
delay is equivalent to a fmall duty, and renders
gold in coin fomewhat more valuable than an
equal quantity of gold in bullion. If in the
Englifh coin lilver was rated according to its
proper proportion to gold, the price of filver
bullion would prjobably fall below the mint price
even without any reformation of the filver coin;
the value even of the prefent worn and defeced
filver coin being regulated by the value of
the excellent gold coin for which it can be
changed.

A SMALL feignorage or duty upon the coinage
of both gold and filver would probably incrcaie
ftill more the fuperiority of thofe metals in coin
above an- equal qttantity of either of them in bul-
lion. The coinage would in this cafe increafe
the value of the metal coined in proportion to
the extent of this fmall duty ; for the fame rev
fon that the lafhion increafes the value of plate
in proportion to the price of that fafhion. The
fuperiority of coin above bullion would prevent
the melting down of the coin, and. would difcou-
rage its exportation. If upon any public exi-
gency it fhould become neceflary to export the
coin, the greater part of it. would foon retura
again of its own accord. Abroad it could fell
only for its weight in bullion. At home it would
buy more than that weight. There would be a
profit, therefore, in bringing it home again. In
France a feignorage of about eight per cent, is

F 1 impofed

6i THR NATUftE AND CAUSES OP

* 0. o K impofed upon the coin|ge, and the French coin,
when exported) is faid to return home again of
ifs own accord*

The occafional fluduations in the market
price of gold and (ilver bullion arife from the
fame caufes as the like lluduations in that of all
other commodities* The frequent lofs of thofe
metals from various accidents by fea and by
land, the continual wafte of them in gilding and
plating) in lace and embroidery^ in the wear and
tear of coin, and in that of plate; require, in all
countries which ppfiefs no mines of their own^ a.
contmual importation,, in ocder to repair this lofs
and this wafte. The merchant importc;rs, like,
all other merchants, we may believe, endeavour^
as well as they can, to fuit their occafional im-
portations to what, they judge, is likely to be the
immediate demand. With ^ their attention^
however, . they fometimes over-do the bufinefs,,
and. fometimes under-dp it. When they import
more bullion. than is wanted, rather than incur
the rifle and trouble of exporting it again, they
are fometimqs willing to fell a part of it for
fomething lefs . than the ordinary or average
price. When, on the other . hand, they import
leis than is wanted, they get fomething more
than .this price. But when, under all thofe oc-
cafional fluduations, the market price either of
gold, or filver bullion continues for fevciral years
together .fteadily ancj conftantly> either more or
lefs above, or more or lefs below the mint price :
we may be. afTurod that this Heady and confiant^
either fuperiority or inferiority of price, is the

THE WEALTH OP NATIONS. «9

cfFeft of fomething in the ftate of the coin, o^^^^*
which, at that time, renders a certain quantity of
coin either of more value or of lefs value than
the precife quantity of bullion which it ought to
contain. The conftancy and fteadinefs of the
effeft, fuppofes a proportionable conftancy and
fteadinefs in the caufe.

The money of any particular country is, at
iaiiy particular time and place, more or lefs an
accurate mealure of value according as the cur-
rent coin is more or lefs exadtly agreeable to its
ftandard, or contains more or lefs exaftly the
precife quantity of pure gold or pure filver which
it ought to contain. If in England, for exam-
ple, forty-four guineas and a half contained ex-.
aftly a pdund weight of ftandard gold, or eleven
ounces of fine gold and one ounce of alloy, the
gold coin of England would be as accurate a
meafure of the aftual value of goods at any par-
ticular time and place as the nature of the thing
would admit. Buy ifi by rubbing and wearing,
forty-four guineas and a half generally contain
lefs than a pound weight of ftandard gold ; the
diminution, however, being greater in fome
pieces than in others; the meafure of value,
comes to be liable to the fame fort of uncertainty
to which all other weights and meafures are com-
,monly expofed. As it rarely happens that thefe
are exaftly agreeable to their ftandard, the mer-
chant adjufts the price of his goods, as well as he
can, not to what thofe weights and meafures
ought to be, but to what, upon an average, he
finds by experience they aftually are. In confe-

F 3 quencc

THE NATURE AND CAUSES OP

* ^iP ^ qucnce of a like diforder in the coin, the price of
goods comes, in the fame manner, to be ad^
jufted, not to the quantity of pure gold or filver
which the coin ou^t to contain, but to that
which, upon an average, it i$ found by expe-i
rience it afbually does contain.

By the money-price of goods, it is to be ob-
ierved, I underitand always the quatmty of pure
gold or filver for which they are fold, without
any regard to the denomination of the coin, Sisc
ibiUings and eight-pence^ for ei^ample, in the
time of Edward I., I confider as the fame noo^
ney-price with a pound fterliqg in the prefent
times ; becaufe it contained, as nearly as we cw
judge, the fame quantity of pure filver.

CHAP, VI,

Of the component Parts of t be Price of Commodities

IN that early and rude ftate of fociety which
precedes both the accumulation of ftock and
the appropriation of land, the proportion be-
tween the quantities of labour neceflary for ac-
quiring different objefts feems to be the only
circumftance which can afford any rule for ex-
changing them for one another. If among a
nation of hunters, for example, it ufually cods
twice the labour to kill a beaver whTth it does
to kill a deer, one beaver Ihould naturally ex-
change

THE WEALTH OP NATIONS, 71

change for or be worth two deer. It is natural ^ ^ a p-
that what is ufually the produce of two days or
two hours labour, fhould be worth double of
what is ufually the produce of one day's or pnc
hour's labour.

If the one fpedes of labour fhould be rnore
fevere than the other, fome allowance will natu-
rally be made for this fuperior hardlhip 5 and the
produce of one hour's labour in the one way
may frequently exchange for that of two hours
labour in the other.

Or if the one fpecies of Ubour requires an
uncommon degree of dexterity and ingenuity,
the efteem which men have for fuch talents, will
naturally give a value to their produce, fuperior
to what would be due to the time employed
about it. Such talents can feldom be acquired
but in confequence -of long application^ and the
fuperior value of their produce may frequendy
be no more than a reafonable compenfation for
the time and labour which muft be Ipent in ac-
quiring them. In the advanced ftate of fociety,
allowances of this kind, for fuperior hardfhip and
fuperior (kill, are commonly made in the wages
of labour ; and fomething of the fame kind muft
probably have taken place in its earlieft and rudeft

period.

In this ftate of things, the whole produce of
labour belongs to the labourer ; and the quantity
of labour commonly employed in acquiring or
producing any commodity, is the only circum^
ftancc which can regulate the quantity of la-

F 4 bour

fz THE NATURE AUD CAUSES OP

B" o^ o K bour which It ought commonly to pwchafe, com-
^mum^mmj xmmAy OX exdiange for.

As foon as ftock- has accumulated in the hands
of particular perfons^ fome of them will naturally
employ it in letting to work induflrious people,
whom they will fupply with materials and fub-
liftencC) in order to make a profit by the faie of
their work, or by what their labour adds to the
value of the materials. In exchanging the com-
plete manufafture either for money, for labour,
or for other goods, over and above what may be
fufficient to pay the price of the materials, and
the wages of the workmen, fbmething muft be
given for the profits of the undertaker of the
work who hazards his ftock in this adventure.
The value which the workmen add to the mate-
rials, therefore, refolves itfelf in this cafe into
two parts, of which the one pays their wages, the
other •the profits of their employer upon the
whole ftock of materials and wages which he
advanced. He could have no intereft to employ
them, unlefs he expefted from the fale of their
work fomething more than what was fufficient to
replace his ftock to him 9 and he could have no
intereft to employ a great ftock rather than a
fmall one, unlefs his profits were to bear fome
proportion to the extent of his ftock.
^ y' J^The' profits of ftock, it may perhaps be
v-^^^^^y^ thought, are only a different name for the wages
G^ i-^t A^V' I of a particular fort of labour, the labour of in-
^t-'\,^ /^. {fpeftion and direftion. They are, however, al-
. 4- C\ V^' \ together difi^erent, are regulated by quite difffer-

THE WEALTH OF NATIONS. 73.

• ■ • ■ ' .

cnt principles, and btar no proportion to the c h a p.

quantity, the hardfhip, or the ingenuity of this
ilippofcd labour of inlpeftion and direftion.
They are regulated altogether by the value of ji
the ftock employed, and are greater or faiallerlV
in jproportion to the extent of this ftock. Let us \
fuppofe, for example, that in fome particular
place, where the common annual profits of ma-'
nufafturing ftock are ten per oeift, there are two
different manufaftures, in each of which twenty
workmen are employed at the rate of fifteen
pounds a year each, or at the wpence of three
hundred a year in each manufaftory. Let us
fuppofe too, that the coarfe materials annually
wrought up in the one coft only feven hundred
pounds, while the finer materials in the other
coft feven thoufand. The capital annually cm-
ployed in the one will in this cafe amount only
to one thoufand pounds j whereas that employed
in the other will amount to feven thoufand three
hundred pounds. At the rate of ten per cent,
therefore, the undertaker of the one will expeft ,
arr yearly profit of about one hundred pounds
only ; while that of the other will expeft about
feven- hundred and thirty pounds. But though
their profits are fo very different, their labour of
infpedion and direftion may be either altogether
or very nearly the fame. In many great works,
almoft the whole labour of this kind is commit-
ted to fome principal clerk. His wages pro-
perly exprefs the value of this labour of infpec-
tion and direction. Though in fettling them
fome regard is had commonly, not only to his

labour

74 THE NATURE AND CAUSES OF

B o^o K labour and fl^ill, but to the truft which is re-,
pofed in him, yet they never bear any regular
proportion to the capital of which he overfees
the management ; and the owner of this capital^
though he is thus difcharged of almoft all. la-
bour, ilill expeds that his profits ihould bear a
regular proportion to his capital. In the price
of commodities, therefbrc, the profits of ftock
conllitute a component part dkogcthtr diflS^rent
from the wages of labour, and regulated by quite
different principles.

In this ftate of things, the whole produce of
labour does not always belong to the labourer.
He muft in mod cafes fhare it with the owner jof
the ftock which employs him. Neither is tbc
quantity of labour commonly employed in ac-
quiring or producing any commodity, the only
circumftance which can regulate the quantity
which it ought commonly to purchafe, commands
or exchange for. An additional quantity, it is
evident, muft be due for the profits of the ftock,
which advanced the wages and furnifhed the ma-
terials of that labour.

As foon as the land of any country has all be-
come private property, the landlords, like all
other men, love to jeap where they never fowed,
and demand a rent even for its natural produce.
The wood of the fdreft, the grafs of the fields
and all the natural fruits of the earth, which, whea
land was in common, coft the labourer^ only the
trouble of gathering them, come, even to him,
to have an additional price fixefl upon them.
Kfe muft then pay for the licence to gather

themj

THE WEALTH OF NATIONS,

them; wd muft ^ve up to the landlord a pordon ^ ^^ ^•
gf what hi$ labour either colle<5i:s or produces.
This portion^ or^ what €aine$ to the fame
thing, the price c^ ihi$ portion^ conftitutes the
rent of land, and in the price of the greater
|>art of commodities makes a third componient
part.

Thc re^l value of all the different component
parts of price, it miift be dbfcrved, is meafured
by die quantity of labour which they can, each of
them, purchafe or command. Laboiur xneafures
the value not <Hily of that part of price which re*
folves itfelf into labour, but of that which refohres
itfetf into rent, and of that which refolves itfelf
into profit.

Ik ^every fociety the price of every commodity
finaUy refolves itfelf into Ibme one or other, or
all of thofe three parts ; and in every improved
ibciety, all the three enter more or leis, as com*
ponent parts, into the price of the far greater
part of commodities.

In the price of corn, for example, one part
pays the rent of the landlord, another pays the
wages or maintenance of the labourers and la-
bouring cattle employed in producing it, and
the third pays the profit of the farmer. Thefc
three parts feem either immediately or ultir
mately to make up the whole price of corn. A
fourth part, it may perhaps be thought, is necef-
fary for replacing the ftock of the farmer, or for
compenfating the wear and tear of his labouring
cattle, and other inftruments of hufbandry. But
it muft be confidered that the price of any in-

6 ftrument

76 THE NATURE AND CAUSES OP

B O^o K ftrumcnt of huftandry, luch as a labouring horfe^
is itfelf made up of the fame three parts; the
rent of the land upon which he is reared^ the la-
bour of tending and rearii^ him, and the profits
of the farmer who advances both the rent of this
landj and the wages of this labour. Though the
price of the corn, therefore^ may pay the price
as well as the maintenance of the horie> the
whole price iidll refdvts itfelf either imniediately
or ultimately into the fame three parts of rentj
labour, and profit.

In the price of flour or meal, we muft add to
' the price of the corn, the profits of die miller,
and the wages of his fervants; in the price of
bread, the profits of the baker, and . the wages
of his fervants ; and in the price of both, the la-
bour of tranfporting the corn from the houfe of
the farmer to that of the miller, and fi-om that
of the miller to that of the baker, (Dgetho- with
the profits of thofe who advance the wages of that
labour.

Th£ price of flax refolvcs itfelf into the fame
three parts as that of corn. In' the price of linen
we muft add to this price the wages of the flax-
drefler, of the fpinncr, of the weaver, of the
bleacher, &c. together with the profits of their
refpedtive employers.

As any particular commodity comes to be
more manufaftured, that part of the price which
refolves itfelf into wages and profit, comes to be
greater in proportion to that which refolves it-
felf into rent. In the progrcfs of the manufac-
ture, not only the number of profits incrcafe,

byt

THE WEALTH OF NATIONS, - 77

but every fubfequcnt profit is greater than the ^ '^ ^ '^•
foregoing J becaufe the capital from which it is
derived muft always be greater. The capital
which employs the jKcavers, for example, muft
be greater than that which employs the fpin^
ners; becaufe it not only replaces that capital
with its profits, but pays, befides, the wages of
the weavers; and the profits muft always bear,
fome proportion to the capital.

In the moft improved focieties, however, there
are always a few commodities of which the price
refolves itfclf into two parts only, the wages of
labour, and: the profits of ftockj and a ftiH
finaller number, in which it confifts altogether in
the wages of labour. In the price of fea-fifh,
for example, one part pays the labour of the
fifliermen, and the other the profits of the capit^
employed in the fifhery. Rent very feldom
makes any part of it, though it does fomerimes,
as I Ihall fhew hereafter. It is otherwife,
at leaft through the greater part of Eurof>e, in
river fifheries. A falmon filhery pays a rent,
and rent, though it ciannot well be called the
rent of land, makes a part of the price of a fal-
mon as well as wages and profit. In fbme parts
of Scotland a few poor people make a trade of
gathering, along the fea-lhore, thofe little va-
riegated ftones commonly known by the name
of Scotch Pebbles. The price which is paid to
them by the ftone-cuttcr is altogether the wages
of their labour ; neither rent nor profit make any
part of it. .

But

7« THE NATtJRft ANfi CAUSES OP

But the whole price of any commodity maft
ftill finally refolve itfelf into fome one or other,
or all of thofe three parts ; as whatever part of ic
remains aiirer paying the rent of the land, and* the
price of the whole labour employed in raifing, ma-
nufafturing, and bringing it to market, muft nc-
ceflarily be profit to fomebody.

As the price or exchj^ngeable value of every
particular commodity, taken feparately, refolves
itfelf into fome one or other, or all of thofe three
parts ; fo that of all the commodities which com-
pofe the whole annual produce of the- labour of
every country, taken complexly, muft refolve
itfelf into the fame three parts, and be parcelled
out among difierent inhabitants of the country,
either as the wages of their labour, the profits of
their ftock, or the rent of their land. The whole
of what is annually either coUedted or produced
by the labour of every fociety, or what comes ta
the fame thing, the whole price of it, is in this
manner originally diftributed among fome of its
different members. Wages, profit, and rent,
are the three original fources of all revenue aa
well as of all exchangeable value. All other
revenue is ultimately derived from fome one or
other of thefe.

Whoever derives his revenue from a fond
which is his own, muft draw it either from his
labour, from his ftock, or fi-om his land. The
revenue derived fi-om labour is called wages.
That derived from ftock, by the perfon who
manages or employs it, is. called profit. That
derived from it by the perfon who docs not em-
ploy

THE ^ALTH OP NATIONS. 70

ploy it himfclfi but lends it to an<^her, is called ^ ^^^ ^*
the intereft: or the ufe of money. It is the com^
penfation which the" borrower pays to the lender,
for the profit which he has an opportunity of
making by the ufe of the money. Part of that
profit naturally belongs to the borrower, who runs
the rilk and takes the trouble of employing it ;
and part to ^he lender, who affords him the op-
portunity of making this profit. The intereft of
rnoney is always a derivative revenue, which, if
it is not paid from the profit which is made by
(he ufe of the money, muft be paid from feme
orfier fource of revenue, unlefs perhaps the bor-
rower is a Ipendchrift, who contrafts a fecond
debt in order to pay the intereft of the firft. The
revenue which proceeds altogether from land, is
called rent, and belongs to the landlord. The
revenue of the farmer is derived partly from his
labour, and partly from his ftock. To him,
land is only the inftrument which enables him ' to
earn the wages of this labour, and to make the
profits of this ftock. All taxes, and all the re-
venue which is founded upon them, all falaries,
penfions, and annuities of every kind, are ulti-
mately derived from fome one or other of thofe
three original fources of revenue, and are paid
cither immediately or mediately from the wages
of labour, the profits of ftock, or the rent of

land.

When thofe three different forts of revenue
beloi^ to different perfons, they are readily dif-
tinguiihed ; but when they belong to- the fame

they

8o > THE NATURE AND CAUSES OF

B o^ o K (hey are fometimcs confounded with one another^
at lead in common language,

A GENTLEMAN who farms a part of his own
eftate, after paying the expencc of cultivation^
ihould gain both the rent of the landlord and
the profit of the farmer. He is apt to denomi-
nate, however, his whole gain, profit, and thus
confounds rent. with profit, at leaft in common
language. The greater part of our North Ame-
rican and Weft Indian planters are in this iicua-
tion. They farm, the greater part of them, their
own eftates, and accordingly we feldom hear o£
the rent of a plantationj, but frequently of ils^
profits . . V

Common farmers feldom employ any overfecr
to direft the general operations of the farm.
They generally too work a good deal with their
own hands, as ploughmen, harrowers, &ff . What
remains of the crop after paying the rent, there-
fore, fliould not only replace to them their ftock.
employed in cultivation, together with its ordi-
nary profits, but pay them the wages which are
due to them, both as labourers and overfeers.
Whatever remains, however, after paying the
rent and keeping up the ftock, is caBed profit.
But wages evidently- make a part of it. The
farmer, by faving thefe wages, muft neceflarily
g^in them. Wages, therefore, arc in this cafe
confounded with profit.

An independent manufafturer, who has ftock
enough both to purch^fe materials, and to main-^
tain himfelf till he can carry his work to market^

fhould

•the wealth of nations. 8i

• ihoiild gain both the wages of a journeyman who c n a r.
works under a mafterj and the profit which that
mafter makes by the fale of the journeyman's
work. His whole gains, however, are com-
monly called profit, and wages are, in this cale
too, confounded with profit.

A GARDENER who Cultivates his own garden
with his own hands, unites in his own perfon the
three different charafters, of landlord, farmer,
and labourer. His produce, therefore, fliould
pay him the rent of the firft, the profit of the
'fecond, and the wages of the third. The whole,
Rowever, is commonly confidered as the earnings
of his labour. Both rent and profit are, in this
cafe, confounded with wages.

As in a civilized country there are but few
commodities of which the exchangeable value
aHfes from labour only, rent and profit contri-
buting largely to that of the far greater part of
them, fo the annual produce of its labour will
always be fuificient to purchafe or command a
much OTeater quantity of labour than what was
employla .in ' raifmg, preparing, and bringing
that produce to market. If the fociety were an-
nually to employ all the labour which it can
annually purchafe^ as the quantity of labour
would encreafe greatly every year, fo the produce
of every fucceedlng year would be of vaftly greater
value than that of the foregoing. But there is
no country in which the whole annual produce is
employed in maintaining the induftrious. The
idle every where confume a great part of it 5 and
according to the different proportions in which

Vol. I. & it

«t THE NATURE AND CAUSES OF

B o o K it i5 annually divided between thofc two differtnt
orders of people, its ordmary or average value
muft either annually increafe, or diminilb, or
continue the fame from one year to another.

CHAP. VII.
Of the natural and Market Price of Commedities^.

THERE is in every fociety or neighbour-
hood an ordinary or average rate both oT
wages and profit in every different employment
of labour and ftock. This rate is naturally re-
gulated, as I fhall fhow hereafter, partly by the
general eircumftanccs of the Ibdety, their riches
©r poverty, their advancing, ftationary, or de-
clining condition; and partly* by the particular
nature of each employment.

There is likewife in every fociety or neigh-
bourhood an ordinary or average rate of rent,
which is regulated too, as I ftiall fliow hereafter,
partly by the general circumftances of the fociety
or neighbourhood in which the land is fituated,
and partly by the natural or improved fertility
of the land.

These ordinary or aventge rates may be called
the natural rates of wages, profit, and rent, at
the time and place -in which diey commonly pre-
vail.

. When the price of any commodity is neither
more nor lefs than what is fufficient to pay the

4 rent

tHE Wealth oP nations. rj

I'Crit of the land> the wages of the labour, and' ^ h a p.
the profits of the ftock employed in raifing, pre-
paring, andbririging it to market, according to
their natural rates, the commodity is then fold
for what may be called its natural price.

The commodity is then Ibid precifely for what
it is wofth, or fbr what it really cofts the perfon
who brings it to market ; for though in common
language what is called the prime coft of any
commodity does not comprehend the profit of
the perfon who is to fell it again, yet if he fells
it at a price which does not allow him the ordi-
nary rate of profit in his neighbourhood, he is
evidently a lofer by the trade -, fince by employ-
ing his ftock in fome other way he might have
made that profit. His profit, befides^ is his re-
venue, the proper fond of his fubfiftence. As,
While he is preparing and bringing the goods to
market, he advances to his workmen their wages,
or their fubfiftence; fo he advances to himfel(^
in the fame manner, his own fubfiftence, which
is generally fuitable to the profit which he may
reaibnably expect from the fale of his goods*
Unlcfs they yield him this profit, therefore, they
do not repay him what they may very properly
be faid to have really coft him.

Though the price, therefore, which leaves
him this profit, is hot always the loweft at which
a dealer may fometimes fell his goods, it is the
loweft at which he is likely to fell thepi for any
confiderable time ; at leaft where there is perfect
liberty, or where he may change his trade as often
as he pleafes.

G a The

THE NATURE AND CAUSES OP

The actual price at which any commodity is
commonly fold is called its market price. It may
cither be above, or below, or ^xa£tly the fame
with its natural price.

The market price of every particular com*
modity is regulated by the proportion between the
quantity which is aftually brought to market, and
the demand of thofe who are willing to pay the
natural price of the commodity, or the whole
value of the rent, labour, and profit, which muft
be paid in order to bring it thither. Such
people may be called the efFeAual demanders,
and their demand the efiefhial demand } iince it
may be fufEcient to efie£buat^ die bringing of
the commodity to marketi It is different from
the abfolute demand. A very poor man may be
faid in fome fenfe to have a demand for a coach
and fix; he might like to have it; but his demand
is not an effedtual demand, as the commodity^ can
never be brought to market in order to fatisfy it.

When the quantity of any commodity which
is brought to market falls fhort of the efFedual
demand, all thofe who are willing to pay the whole
value of the rent, wages, and profit, which ihuft
be paid in order to bring it thither, cannot be fup«
plied with the quantity which they want^ Rather
than waftt it altogether, fome of them will be will-
ing to give more, A competition will immedi-
ately begin among them, and the market price
will rife more or lefs above the natural price, ac*
cording as either the greatnefs of the deficiency^
or the wealth and wanton luxury of the competi^
tors, happen to animate more or lefs the eagernefi

THE WEALTH OF NATIONS.. . «5

of the Gompetition. Among competitors of equal ^ ^^ ^'
wealth and luxury the fame deficiency will gene-
rally occalion a more or lefs eager competition,
according as the acquifition of the commodity
happens to be of more or lefs importance to
them. Hence the exorbitant price of the ne-
ceflaries of life during the blockade of a town or
in a famine.

• When the quantity brought to* market exceeds
die effeftual demand, it cannot be all fold to
thofe who are willing to pay the whole value of
the rent, wages and profit, which muft be paid
in order to bring it thither. Some part muft be
fold to thofe who are willing to pay lefs, and the .
low price which they give for it muft reduce the
price of the whole. The market price will fink
more or lefs below the natural price, according
as the greatnefs of the excefs increafes more or
iefs^ the competition of the fellers, or according
as it happens to be more or lefs important to
them to get immediately rid of the commo-
dity. The fame excefs in the importation pf
perifliable, will occafion a much greater com-
petition than in that of durable commodities;
in the importation of oranges, for example, than
in that of old iron.

When the quantity brought to market is juft
fufficient to fupply th#.>efFe£h]al demand and no
more, the market pliku||Liaturally comes to Jbe
either exactly, or as nearly as can be judged ofi
the fame with the natural price. The whole
quantity upon hand can be difpofed of for this
price, and cannot be difpofed of for jnore. Th?

G 3 cpmpe^

86 THE NATURE AND CAUSES OF

BOOK competition of the different dealers obliges them
all to accept of this price, but docs not oblige
them, to accept of lefs.

The quantity of every commodity brought to
market naturally fuits itfelf to the effeftual de-
mand. It is the intereft: of all thofe who employ
their land, labour, or flock, in bringing any
commodity to market, that the quantity never
Ihould exceed the effedtual demands and it is the
intereft of all other people that it never ihould
fall (hort of that demand.

If at any time it exceeds the effeftual demand,
fome of the component parts of its price muft
be paid below their natural rate. If It is rent,
the intereft of the landlords will immediately
prompt them to withdraw a part of their land ;
and if it is wages or profit, the intereft of the
labourers in the one cafe, and of their employers
in the other, will prompt them to withdraw a
part of their labour or ftock from this empl(Jy-
inent. The quantity brought to market will
foon be no more than fufficient tcr fupply the
effectual demand. All the different parts of its
price will rife to their natural rate, and the whole
price to its natural price.

If, on the contrary, the quantity brought to
market fhould at any time fall fhort of the effec-
tual demand, fome of the component parts of its
price muft rife above tl^eir natural rate. If it is
rent, the intereft of all other landlords will na-
turally prompt them to prepare more land for
the raifing of this commodity -, if it is wages or
profit, the intereft of all other labourers and

. dealers

THE WEALTH OF NATIONS ^7

dealers will foon prompt them to employ more ^ ^^ a p.
labour and flock in preparing and bringing it tQ \^ 7' '^
market* The quantity brought thither will fooa
be fufficient to fupply the efFeftual demand. All
the different parts of its price will foon fink
to their natural rate, and the whole price to its
natural price.

The natural price, therefore, is, as it werel
the. central price, to which the prices of all com-l
modifies are continually gravitating. DifFerenn
accidents may fometimes keep them fulpended a
good deal above it, and fometimes force , them
down even fomewhat below it. But whateven
m^y be the obftacles which hinder them from^
fettling in this center of rcpofe and continuancej
they are conflantly tending towards it. \

The whole quantity of induflry annually em-
ployed in order to bring any commodity to
market, naturally fuits itfelf in this manner to
the efFcdual demand. It naturall]{r aims at bring-
ing always that precife quantity thither which
may be fufficient to fupply, an4 no more than
fupply, that demand.

But in fome employments the farpe quantity
qf induflry will in different years produce very
different quantities of commodities; while in
others it will produce always the fame, or very
nearly the fame. The fame number of labourers
in hufbandry will, in different year^, produce
very different quantities of corn, wine, oil, hops,
&c. But the fanfie number of fpinners and
weavers will every year produce the fame or very
nearly the fame quantity of linen and woollen

G 4 cloth.

88 THE NATURE AND CAUSES OF

BOOK cloth. It is only the average produce of the one
fpccies of induftry which can be fuited in any
refpeft to the eSedual demand ; and as its aftual
produce is frequently much greater and frequently
much lefs than its average produce, the quantity
of the commodities brought to market will fome-
times exceed a good deal, and fomeumes fall fhort
3, good deal, of the efFeftual demand. Even
though that demand therefore ihould continue al-
ways the fame, their market price will be liable to
great fluctuations, will fometimes fall a good deal
below, and fometimes rife a good deal above, their
natural price. In the other fpecies of induftry,
the produce of equal quantities of labour being
always the ianAe, or very nearly the fame, it can
be more exa£tly fuited to the efFedtual demand.
While that demand continues the fame, therefore,
the market price of the commodities is likely to
do fo too, and to be either altogether, or as nearly
as can be judged of^ the fame with the natural
price. That the price of linen and woollen cloth
is liatble neither to fuch frequent nor to fuch great
variations as the price of corn, every man's ex-
pferience will inform him. The -price of the one
fpecies of commodities varies only with the vari-
ations in the demand : That of the other varies
not only with the variations in the demand, but
with the much greater and mcfre frequent varia-
tions in the quantity of what is brought to mar-
ket in order to fupply that demand.

The occafional and temporary fluftuations in
the market price of any commodity fall chiefly
upon thofe parts of its price which refolve them-

felves*

THE WEALTH OF NATIONS. 89.

ielves into wages and profit. That part which ^ " ^ p-
rcfolves itfelf into rent is lefs affeded by them.
A rent certain in money is not in the leaft af*
fedted by them cither in its rate or in its value.
A rent which confifts either in a certain propor-
tion or in a certain quantity of the rude produce,
is no doubt affected in its yearly value by all the
occafional and temporary fliuftuations in the
inarket price of that rude produce ; but it is fel-
dom affedled by them in its yearly rate. In
fettling the terms of the ieafe, the landlord and
farmer endeavour, according to their beft judg-
ment, to adjuft that rate, not to the temporary
and occafional, but to the average and ordinary
price of the produce.

Such fluduations affeffc both the value and
the rate either of wages or of plrofit, according
as the market happens to be either over- flocked
or under-flocked with commodities or with la-,
bour ; with work done, or with work to be done.
A public mourning raifes the price of black
cloth (with which the market is almofl always
under-ftocked upon fuch occafions), and aug-
ments the profits of the merchants who pofTds
any confiderable quantity of it. It has no effect
ypon the wages of the weavers. The market is
under-ftocked with commodities, not with labjourj
with work done/ not with work to be done. It
raifes the wages of journeymen taylors. The
market is here under-ftocked with labour. There
is an effcftual demand for more labour, for more
work to be done than can be had. It finks
the price of coloured filks and cloths, and there-

9# THE NAtURE AND CAUSES OF

B o o K by reduces the profits of the merchants who
have any confiderable quantity of them upon
hand« It finks too the wages of the workmen
employed in preparing fuch comg^iodities, for
which all demand is ftopped for fix months^
perhaps for a twelvemonth. The market is here
over-ftocked both with commodities and with la*
hour.

But though the market price of every parti-
cular commodity is in this manner continually
gravitating, if one may fay fo, towards the na-
tural price, yet fometimes particular accidents,
fometimes natural caufes, and fometimes parti-«
cular regulations of police, may, in many con^-
modities, keep up the market price, for a long
time together, a good deal above the natural
price.

When by an increafc in the eiFedtual demand,
the market price of fome particular commodity
happens to rife a good deal above the natural
price, thofe who employ their ftocks in fupply-
ing that market are generally careful to conceal
this change. If it was commonly known, their
great profit would tempt fo many new rivals to
employ their ftocks in the fame way, that, the
efFeftual demand being fully fupplied, the market
price would Ibpn be reduced to the natural price,
and perhaps for fome time even below it. Jf the
market is at a great diftance from the refidenci^
of thofe who fupply it, they may fometimes be
able to keep the feqret for feveral years together,
and may fo long enjoy their extraordinary profits
without any new rivals. Secrets of this kind,

however.

THE WEALTH OF NATIONS. 91

however, it muft be acknowledged, can feldom chap.
be long kept; and the extraordinary profit can
laft very little longer than they are kept.

Secrets in manufaftures are capable of being
longer kept than fecrets in trade. A dyer who
has found the means of producing a particular
/colour with nnaterials which coft only half the
price of thofe commonly made ufe of, may, with
good management, enjoy the advantage of his
difcoVery as long as he lives, and even leave it
as a legacy to his pofterity. If is extraordinary
gains arife from the high price which is paid for
his private labour. They properly confift in the
high wages of that labour. But as they are re-
peated upon every part of his ftock, and as their
whole amount bears, upon that account, a regu-
lar proportion to it, they are commonly confi-
dered as extraordinary profits of ftock.

Such enhancements of the market price are
evidently the efFefts of particular accidents, of
which, however, the operation may fometimes
laft for many years together.

Some natural produftions require fuch a fingu-
larity of foil and fituation, that all the land in a
great country, which is fit for producing them,
may not be fufficient to iupply the eiFeftual
demand. The whole quantity brought to mar-
ket, therefore, may be difpofcd of to thofe who
are willing to give more than what is fufficient
to pay the rent of the land which produced them,
together with the wages of the labour, and the
profits of the ftock which were employed in pre-
paring and bringing them (» market, according

9s THE NATURE AND CAUSES OF

B o o K to their, natural rates. Such commodities may
< .. J »> continue for whole centuries together to be fold at
this high price ; and that part of it which refolves
itfelf into the rent of land is in this cafe the part
which is generally paid above its natural rate.
The rent of the lan^ which afiPords fuch fingu-
lar and efteemed produftions, like the rent of
fome vineyards in France of a peculiarly hap-
py foil and fituation, bears no regular propor-
tion to the rent of other equally fertile and
equally well- cultivated land in its neighbour-
hood. The wages of the labour and the pro-
fits of the flock employed in bringing fuch com-
modities to market, on the contrary, are fcldom
out erf" their natural proportion to thofe of the
other employments of labour and flock in their
neighbourhood'.

Such enhancements of the market price arc
evidently the efFe6l of natural caufes which may
hinder the efFedual demand from ever being
fully fupplied, and which may continue, there-
fore, to operate for ever.

/ A MONOPOLY granted either to an individual
/or to a trading company has the fame efFe6k as a
/ fecret in trade or manufafturcs. The monopOr
/ lifls, by keeping the market conflantly under-
flocked, by never fully fupplyihg th« cfFedual
' demand, fell their commodities much above the
natural price, and raife their emoluments, whe-
ther they confift in wages or profit, greatly above
their natural rate.

The price of monopoly is upon every occafioil
the highcfl whichcan.be got. TJie natural price,

THE iiVEALTH OF NATIONS. 93

or the price of free competition, on the contram c ha p.
is the loweft which can be taken, not upon ^vcA
occaiion indeed, but for any confiderable timcl
together. The one is upon every occafion thq
higheft which can be fqueezed out of the buyers!
or which, it is fuppofed, they will confent to*
give : The other is the loweft which the fellers \
can commonly afford to take, and at the fame)
time continue their bufinefs.

The exclufive privileges of corporations^ fta-
tutes of appr^nticefliip, and all thofe laws which
reftrain, in particular employments, the compe-
tition to a fmaller number than might otherwiie
go into them, have the fame tendency, though
in a lefs degree. They are a fort of enlarged
monopolies, and may frequently, for ages toge-
ther, and in whole clafles of employments, keep
up the market price of particular commodities
above the natural price, and maintain both the
wages of the labour and the profits of the (lock
employed about them fomewhat above their na-
tural rate.

Such enhancements of the market price may
lall: as long as the regulations of police which give
occafion to them.

The market price of any particular commo-
dity, though it may continue long% above, caj
ieldom continue long below, its natural pric<
Whatever part of it was paid below the natun
rate, the perfons whofe intereft it affedbed would
immediately feel the lofs, and would immediately
withdraw either fo much land, or fo much la-
bour, or fo much ftdck, from being employed

about

94 THE NATURE AND CAUSES OP

B o^o K about it, that the quantity brought to market

J would foon be no more than fufficient to fupply thd

/ effeftual deniaftd. Its market price, therefbrej

/ would foon rife to the natural price* This at

^ leaft would be the cafe where there was perfeft

liberty.

The fame ftatutes of apprenticefhip and other
corporation laws indeed, which, when a manu-
fafture is in proiperity, enable the workman to
raife his wages a good deal above their natural
rate, fometimes oblige him, when it decays^ to
let them down a good deal below it. As in the
one cafe they exclude many people from his em-
ployment, fo in the other they exclude him from
many employments. The efFeft of fueh- regular
tions, however, is not near fb durable in finking
the workman's wages below, as in raifing then!
above, their natural rate. Their operation in the
one way may endure for many centuries, but in
the other it can laft no longer than the lives of^
ibme of the workmen who were bred to the bufi-
nefe in the time of its profperity. When they
are gone, the number of thofe who are after-*-
wards educated to the trade will naturally fuit
itfelf to the efFeftual demand. The police muft
be as violent as that of Indoftan or antient Egypt
(where eveiy man was bound by a principle of*
reUgion to follow the occupation of his father^
and was fuppofed to commit, the moft horrid
facrilege if he changed it for another )i which can
in any particular employment, and for feveral
generations together, fmk cither the wages of

labour

THE WEALTH OF NATIONS. .95

labour or the profits of ftock below their natural '^ ^^^ p*
rate.

This is all that I thiak ncceflary to be ob-
ferved at prefent concerning the deviations, whe-
ther occafional or permanent, of the market
price of ccwnmodities from the natural price.

The natural price itfelf varies with the na-
tural rate of each of its component parts, of
wages, profit, and rent j and in every focietjr
this rate varies according to their circumftanceSy
according to their riches or ppverty, their ad-
vancing, ftationary, or declining condition. I
ihaH, in the four folbwing chapters, endeavour
to explain, as fvMy and diftindly as I can, the
caufes of thofe difierent variations.

First, I (hall endeavour to explain what are
the circumftances which naturally determine the
rate of wages, and in what manner thofe cir-
cumftances are afieded by the riches or poverty^
by the advancing, ftationary, or declining ftate
of the fociety.

Secondl-y, I fhall endeavour to fliow what are
the circumftances which naturally determine the
rate of profit, and in what manner too thofe cir-
-cumffances zr't afFefted by the like variations in
the ftate of the fociety.

Though pecuniary wages and prdlit are very
different in the different employments of labour
and ftock 5 yet a certain proportion feems coitt-
itionly fo take place between both the pecuniary
wages in all the different employments of labour,
and the pecuniary' profits in all the different em-
ployment of ftock. This proportion^ it will

appear

■

' I

96 . THE NATURE AND CAUSES OP

* ^if '^ appear hereafter, depends partly upon the nattirt;
of the different employments, and partly upon
the different laws and policy of the fociety in
which they arc carried oh. But though in many
refpefts dependent upon the laws and- pc^cy,
this proportion feems to be little affefted by the
riches or poverty of that fociety ; by its advan*-
cing, ftationary, or declining condition i but to
remain the fame or very nearly the fame in all
thofe different ftates. I fhall, jn the third place,
endeavour to explain all the different circum-
ftances which regulate this proportion.

In the fourth and laft place, I fhall endeavour
to ibow what are the circumftances which regulate
the rent of land, and which either raiie or lower
the real price of all the dififerent fubftances which
it produces.

CHAP. VIIL

Of the Wages of Labour.

THE produce of labour conftitutes the na-
tural recompence or wages of labour.
In that* original date of things, which pre-
- cedes both the appropriation of land and th€
accumulation of ftock, the whole produce (rf
labour belongs to the labourer. He has neither
landlord nor mailer to fhare with him.

Had this ftate continued, the wages of labour
would have augmented with all thofe improve-
ments

V /

THE WEALTH OF NATIONS. . 97

hients in its produftive powers, to which the ^ ^^^ ^*
divifion of labour gives occafioh. All things
would gradually have become cheaper. They
would have 'been produced by a fmaller quan-
tity of labour; and as the commodities pro-
duced by equal quantities of labour would natu-
rally, in this ftate of things be exchanged for
one another, they would have been purchased
likewife with the produce of a fmalkr quan-
tity.

But though all things would haVe become
cheaper in reality, in appearance many things
might have become dearer than before, or have ,
been exchanged for a greater quantity of other
goods* ' Let us fuppofe, for example, that in the
greater" part of employments the produdlive
powers of labour had been improved to tenfold,
or that a day's labour could produce ten times
the quantity of work which it had done origi-
nally ; but that in a particular employment they
had been improve;d only to double, or that a
day^s labour could, produce only twice the quan-
tity of work which it had done before. In ex-
changing the produce of a day's labour in the
greater part of employments, for that of a day's
, labour in this particular one, ten times the ori-
ginal quantity of work in them would purchafe
only twice the original quantity in it. Any
particular quantity in it, therefore, a pound
weight, for example, would appear to be five
times dearer than before. In reality, however^
it would be twice as cheap. Though it re-'
quired five times the quantity of other goods to
Vol. I. H purchafe

9« THE NATURE AND CAUSES Of

^ ^^ ^ purchafe it, it would require only half the quan^
i » f tity of labour cither to purchafe or to produce
it. The acquifition, therefore, would be twice
as eafy as before. ,

But this original ftate of things, in which the
labourer enjoyed the whole produce of his own
labour, could not laft beyond the firft introduc*
tion of the appropriation of land and the accu*
muiation of flock. It was at an end, therefore^
long before the moft conliderable improvennents
wer^ made in the productive powers of labour,
and it would be to no purpofe to trace further
what might have been its effe<5ts upon the rccom-
p^ce or wages of labour.

As foon as land becomes private property, the
landlord demands a fliare of almoft all the pro-
duce which the labourer can either raife, or col-
left from it. His rent makes the firft deduc-
tion from the produce of the labour which is
employed upon land.

It fcldom happens that the perfbn who tills
the ground has wherewithal to maintain himfelf
till he reaps the harvefl. His maintenance is
generally advanced to him frogi the ftock of a
mafter, the farmer who employs him, and who
would have no intcreft to employ him, unlefs he
was to fliare in the produce of his labour, or un-
lefs his ftock was to be replaced to him with ar
profit. This profit makes a fecond deduftion
from the produce of the labour which is em-
ployed upon land.

The produce of almoft all other labour is^
liable to the like deduftion of profits In all arts

and

THE WEALTH OP NATIONS. 99

and manufadures the greater part of the work- ^ ^^^ p.
men ftahd in need of a mafter to advance them
the materials of their work, and their wages and
maintenance till it be completed. He fhares
in the produce of their labour, or in the value
which it adds ta the materials upon which it la
bellowed i and in this (hare confifls his profit.

It ibmetimes happens, indeed, that a (ingle
independent workman has ftock fufficient both
to purchafc the materials of his work, and to
maintain himfelf till it be completed. He is
both mafter and workman, and enjoys the whole
produce of his own labour> or the whole value
which it adds to the materials upon which it is
beftowed. It includes what are ufually two
diftinft revenues, belonging to two diftinft per-
sons, the profits of ftock, and the wages of la-*
bour.

Such cafes, however, are not very frequent,
and in every part of Europe, twenty workmen
ferve under a mafter fot one that is independent ;
and the wages of labour are every where under-
ftood to be, what they ufually are, when the
labourer is one perfon, and the owner of the
ftock which employs him another.

What are the common wages of labour, de- *
pends every where upon the contraft ufually
made between thole two parties, whofe intcrefts
are by no means the fame. The workmen delire
to get as much, the mafters to give as little as
poffible. The former are di^ofed to combine in
order to raile, the latter in order, to lower the
wages of labour.

Hz It

loo THE NATURE AND CAUSES OF

BOOK It is not, however, diificult to forefee which
of the two parties mud, upon all ordinary occa-
(ions, have the advantage in the dilute, and
force the other into a compliance with their
terms. The mailers^ being fewer in number,
can combine much more eafily; and the law,
befides, authorifes, or at leaft does not prohibit
their combinations, while it prohibits thofe of
the workmen. We have no afts of parliament
jagainft combining to lower the price of work ;
/but many againlt combining to raife it. In all
fuch difputes the mafters can hold out much
longer. A landlord, a farmer, a mailer manu*
fafturer, or merchant, though they did not cm-
ploy a fingle workman, could generally live a
year or two upon the flocks which they have
already acquired. Many workmen could not
fubfift a week, few could fubfifl a month, and
fcarce any a year without employment. In the
long-run the workman may be as nece(&ry to
his mailer . as his mailer is to him j but the ne-
ceflity is not fo immediate.

We rarely hear, it has been faid, of the com-
ti nations of mailers; though frequently of thofe
of workmen. But whoever imagines, upon this
account, that mailers rarely combine, is as igno-
rant of the world as of the fubjeft. Mailers are
always and every where in a fort of tacit, but
conftant and uniform, combination, not to raife
the wages of labour above their aftual rate. To
violate this combination is every where a mofl
unpopular adlion, and a fort of reproach to a
mailer among his neighbours and equals. . We

feldom.

THE WEALTH OF NATIONS. ,oi

feldom, indeed, hear of this combination, be- ^ " a p.

vui,

caufe it is the ufual, and one may fay, the natu-
ral ftate of things which nobody ever hears of.
Mafters too fometimes enter into particular com-
binations to fink the wages of labour even below
this rate. Thefe are always condufted with the
utmoft filence and fecrecy, .till the moment of
execution, and when the workmen yield, as they
fometimes do, without refiftance, though fe-
verely felt by them, they are never heard of by
other people. Such combinations, however, are
frequently refilled by a contrary defehfive com^
bination of the worknoeni who fometimes too,
without any provocation of this kinjd, combine
of their own accord to raifc the price of their
labour. Their ufual pretences are, fometimes
the high price of provifions j fometimes the great
profit which their mafters make by their work.
B^it whether their combinations be oftenfive'or
defenfive, they arc always abundantly heard of.
In order to bring the point to a fpeedy decifion,
they have always recourfe to the loudeft: cla-
mour, and fometimes to the moft fliocking vio-
lence and outrage. They are defperate, and a6l
with the folly and ej^travagance of defperate men,
who muft either ftarve, or frighten their mafters
into an immediate compliance with their demands.
The mafters upon thefe occafions are juft as cla-
morous upon the other fide, and never ceafe to
call aloud for the afliftance of the civil magi-
^ftrate, and the rigorous execution of thofe laws
which have been enacted with fo much feverity
againft the combinations of feryantSj, labourers,

H 3 ^r\ii

to2 THE NATURE AND CAUSES OF

^ ^j^ "^ and journeymen. The worIanen> accordingty^
c— -y— J very feldom derive any advantage from the vio-
lence of thofe tumultuous combinatiQn3) which,
/^iH pardy from the intserpofition of the civil magi*

ftrate, partly from the fuperior fteadinefs of the
mailers, pardy from the ncceffity which the
greater part of the workmen are under of fubmit-
ting -for the fake of prefent fubfiftence, generally
end in nothing, but the punifhment or ruin of the
ringleaders.

But though in difputes with their workmen,
mafters muft generally have the advantage, there
is however a certain rate, below which it feems
impoffible to reduce, for any confiderable time,
the ordinary wages even of the lowed ipecies of
labour.

A MAN muft always live by his work, and his
wages muft at leaft be fufficient to maintain
him. They muft even upon moft occafions be
fomewhat more ; otherwifc it would be impoffible
for him to bring up a family, and the race of
fuch workmen could not laft beyond the firft
generation. Mr. Cantillon feems, upoiiLthis ac-
count, to fuppofe that the loweft fpecies of com-
mon labourers muft every where earn at leaft
double their own maintenance, in order that one
with another they may be enabled to bring up
two children ; the labour of the wife, on account
of her neceffary attendance on the children, be-
ing fuppofed no more than fufficient to provide
for herfelf. But one-half the children born,
it is computed, die before the age of man-
hoods The pooreft labourers, therefore, ac-
cording

r '

THE WEALTH OF NATIONS. loj

cording to this account, muft, one with another, ^ ^^^^ ^*
attempt to rear at lead four children, in order
that two may have an equal chance of living to
that age. But the neceffary maintenance of four
children, it is fuppofed, may be nearly equal to
that of one man. The labour of an able-
bodied flave, the fame author adds, is computed
to be worth double his maintenance; and that
of the meaneft labourer, he thinks, cannot be ^ '
worth lefs than that of an able-bodied flave. ) /^tc^
,Thus far at leaft feems"certain, that, in order to ^
bring up a family, the labour of the hufband
and wife together muft, even in the loweft Ipe-
cies of common labour, be able to earn fbrne^
thing more than what is precifely neceffary for
their own maintenance} but in what proportion,
whether in that above mentioned, or in any
other, I fhall not take upon me to determine.

There are certain circumftances, however,
which fometime$ give the labourers an advan-
tage, and enable them to raife their wages con-
fiderably above this rate; evidently the loweft
which is confiftent with common humanity.

When in any country the demand for thofc
who live by wages ; labourers, journeymen, fer-
. vants of every kind, is continually increafing ;
when every year furniflies employment for a
greater number than had been employed the
year before, the workmen have no occafion to
combine in order to raife their wages, The
fcarcity of hands occaflons a competition among;
mafters, who bid againft one another, in order
to g€t workmen, and thus voluntarily break

H 4 through

104 THE NATURE AND CAUSES OP

through the natural combination of mailers not to

raife wages.

The demand for thofe who live by wages, it ii
evident, cannot increafe but in proportion to the
increafe of the funds which are deftined for the
payment of wages. Thefe funds are of two
kinds: firft, the revenue which is over and
above what is neceflary for the maintenance j
and, fecondly, the ftock which is over and above
what is neceflary for the employment of their
matters.

When the landlord, annuitant, or monied man,
has a greater revenue than what he judges fuffi-
cicnt to maintain his own family, he employs
either the whole or a part of the furplus in main-
taining one or more menial fervants. Increafe
this furplus, and he will naturally increafe the
number of thofe fervants.

When an independent workman, fuch as a
weaver or fhoe-maker, has got more ftock than
what is fufficient to purchafe the materials of his
own work, and to maintain himfelf till he can
difpofe of it, he naturally employs one or more
journeymen with the furplus, in order to make a
profit by their work. Increafe this furplus, and
he will naturally increafe the number of his jour-
neymen.

The demand for thofe who live by wages,
therefore,' neceflarily increafes with the increafe
of the revenue and ftock of every country, and
cannot poflibly increafe without it. The increafe
of revenue and ftock is the increafe of national
wealth. The demand for thofe who live by

wages.

THE WEALTH OF NATIONS. 105

^wages, therefore, naturally increafes with the! ^ ha p,
increafe of national wealth, and cannot pofliblyl
iiicreafe without it.

^ It is not the aftual greatnefs of national!
wealth, but its continual increafe, which occa- \
fions a rife in the wages of labour. It is not,
accordingly, in the richeft countries, but in the
moft thriving, or in thofe which are growing
rich the fafteft, that the wages of labour are
higheft. England is certainly, in the prefent
times, a nnuch richer country than any part of
North America. The wages of labour, how-
ever, are much higher * in North America than
in any part of England. In the province of New
York, common labourers earn * three Ihillings
and fixpence currency, equal to two fliillings fter-
ling, a day; fhip carpenters, ten fhillings and
fixpence currency, with a pint of rum worth fix-
pence fterling, equal in all to fix fliillings and
fixpence fterling; houfe carpenters and brick-
jfayers, eight fliillings currency, equal ' to four
fliillings and fixpence fterling; journeymen tay-
lors, five fliillings currency, equal to about two
fliillings and ten pence fterling. Thefe prices
are all above the I^ondon price ; and wages arc
faid to be as high in the other colonies as in New
York: The price of provifions is every whefc
in North America much lower than in England,
A dearth has never been known there. In the
worft feafons, they have always had a fufiiciency

* This was written in 1773, before the commencement of \\
(he late difturbances..

for

io6 THE NATURE AND CAUSES OF

B o o K fof themielve$9 though Ids for exportadon. If
T_ ^ _p the money price of labour, therefbre, be higher
than it is any where in the mother country, its
real price, the real command of the neceflaries
and conveniencies of life which it conveys to the
labourer, muft be higher in a ftill greater pro-
portion.

But though North America is not yet {o rich
as England, it is much more thriving, and ad-
vancing with much greater rapidity to the further
^ . ,^^-*^ acquifition of riches. The moil dccifive mark
V^ ' "" / of the profperity of any country is the increafe
Z*^<*x . v^f ^g number of its inhabiunts. In Great Bri-

tain, and moft other European countries, they
* • are not fuppoled to double in lefs than five hun-

dred years. In the Britifh colonies in North
America, it has been found, that they double in
twenty or fivc-and-twenty years. Nor in the
prcfent times is this increaie principally owing
to the continual importation of new inhabitants,
but to the great multiplication of the Ipecies,.
Thofe who live to old age, it is faid, frequently
fee there from fifty to a hundred, and fometimes
many more, defcendants from their own body.
Labour is there fo well rewarded, that a nume*
rous family of children, inftead of being a bur-
then, is a fburce of opulence and profperity to
the parents. The labour of each child, before
it can leave their houfe, is computed to be worth
a hundred pounds clear gain to them. A young
widow with four or five young children, who,
among the middling or inferior ranks of people
in Europe, would have fo litc|e chance for a

4 l€Con4

THE WEALTH OF NATIONS. 107

feoond huifoand, is there frequently courted as a ^ " .^ ''•
fort of faauDjgyt The value of children is the
greiteft of all encouragements to marriage. We
cannot, therefore, wonder that the people in
North America Ihould generally many very
young. Notwithftanding the great increafe oc-
cafioncd by fudi early marriages, there is a con-
tinual complaint of the fcarcity of hands in
North America, The demand for labourers, the
funds deftined for maintaining diem, increafe, it
feems, ftill fafter than they can find labourers to
employ.

Though the wealth of a country fhould be
very great, yet if it has been long ftationary, wc
muft not CKpeft to find the wages of kbour very
high in it. The funds dcftined for the payment
of wages, the revenue and^ftock of its inhabit-
ants, may be of the greateft extent ; but if they
have continued for feveral centuries of the fame,
or very nearly of the fame extent, the number
of labourers employed every year could eafily
fupply, and even more than fupply, the number
wanted the following year. There could feldom
be any fcarcity of hands, nor could the mafters^
be obiged to bid againft one another in order to
get them. The hands, on the contrary, would,
in this cafe, naturally multiply beyond their em-
ployment. There would be a conftant fcarcity
of employment, and the labourers would be
obliged to bid againft one another in order to
get it. If in fuch a country the wages of labour
had ever been more than fufficient to maintain
the. labourer, and to enable him to bring up a

family.

r
4

io8 THE NATURE AND CAUSES OF

BOOK ^imily, the competition of the labourers and the
intereft of the mafters would loon reduce them to
this lowed rate which is conGftent with com-
mon humanity. China has been long one of the
richeft, that is, one of the moft fertile, bcft cul-
tivated, moil induftrious, and moft populous
countries in the world. It feems, however, to
have been long ftationary. Marco Polo, who
vifited it more than five hundred years ago, de-
fcrjbes its cultivation, induftry, and populouf-
nefs, almoft in the fame terms in which they
are defcribed by travellers in the prefent times.
It had perhaps, even long before his time, ac-
quired that fijU complement of riches which the
nature of its laws and inftitutions permits it to
acquire. The accounts of all travellers, incon-
fiftent in many other refpefts, agree in the low
wages of labour, and in the difficulty which a
labourer finds in bringing up a family in China.
If by digging the ground a whole day he can get
what will purchafe a fmall quantity of rice in the
evening, he is contented. The condition of ar-
tificers is, if poffible, ftill worfe. Infteid of
waiting indolently in their work-houfes, for the
calls of their cuftomers, as in Europe, they are
continually running about the ftreets with the
tools of their refpeftive trades, offering their
fervice, and as it were begging employment.
The poverty of the lower ranks of people in
China far furpafles that of the moft beggarly
nations in Europe. In the neighbourhood of
Canton many hundred, it is commonly faid,
many thoufand families have no habitation on

the

HAP.
VIU.

THE WEALTH OF NATIONS, lOg

the land, but live conftantly in little fifhirig badts ^
upon the rivers and canals. The fubfiftenee
which they find there is fo fcanty that they are
eager to fifh up the naftieft garbage thrown over-
board from any European (hip. Any carrion,
the carcafe of a dead dog or cat;^ for example,
though half putrid and ftinking, is as welcome
to them as the moft wholefome food to the
people of other countries. Marriage is encou-
raged in China, not by the profitablenefs of chil-
dren, but by the liberty of deftroying them. In
all great towns feveral are every night expofed in
the ftreet, or drowned like puppies in the water.
The performance of this horrid office is even
faid to be the avowed bufinefs by which fome
•people earn their fubfiftenee. -jcr,-. , .■ • ■• .. :

China, however, though it may perhaps ftand
ftill, does not feem to go backwards. Its towns
are no- where deferted by their inhabitants. The
lands which had once been cultivated, are no-
where neglefted. The fame, or very nearly the
fame, annual labour muft therefore continue to be
performed, and the funds deftined for maintain-
ing it muft not, confequently, be fenfibly di-
minilhed. The loweft clafs of labourers, there-
fore, notwithftanding their fcanty fubfiftenee,
muft fome way or another make fliift to continue
their race fo far as to keep up their ufual num-
bers.

' But it would be otherwife in a country where
the funds deftined for the maintenance of labour
were fenfibly decaying. Every year the demand
for fervants and labourers would, in all the dif-
ferent

110 THE NATURE AND CAUSES OP

BOOK ferent claflfes of employments^ be Icfe than ic
had been the year before. Many who had been
bred in the fuperior clailes, not beir^ able to
find employment in their own bufinefe, would be
glad to feek it in the loweft. The lowcft clafe
being not only overftocked with its own work-
men, but with the overflowings of all the other
clafles, the competition for empk>yment would
be fo great in it, as to reduce the wages of la-
bour to the mdl miferable and fcanty fubfiftence
of the labourer. Many would not be able v>
find employment even upon thefe hard terms,
but -would either ftarve, or be driven to feek a
ibbfiftcnce either by begging, or by the per-
petration perhaps of the greateft enormities.
Waat, famine, and mortality, would immediately
prevail in that clafs, and from thence extend
therofelves to all the fuperior clafles, till the
number of inhabitants in the country was re-
duced to what could eafily be maintained by the
revenue and ftock which remained in it, and
which had efcaped either the tyranny or calamity
which had deftroycd the reft. This perhaps is
nearly the prefent ftate of Bengal, and of feme
other of the Englilh fetdements in the Eaft
Indies. In a fertile country which had before
been much depopulated, where fuhfiftence, cpn-
l£quently> Ihould not be very difficult, "and
where, notwithftanding, three or four hundred
thoufend people die of hunger in one year, we
may be affured that the funds deftincd for the
maintenance of the labouring poor are faft de-
caying. The di25:rence Ijetween die genius of

the

THE WEALTH OF NATIONS. iti

the Britifli conftitution which protefts and go- ' ^ " ^ p.
vcrns North America, and that of the mercantile
company which oppreffes and domineers in the
Eaft Indies, cannot perhaps be better illuftrated
than by the different ftate of thofe countries,

The liberal reward of labour, therefore, as it
is the neceflary efFeft, fb it is the nattiral fymp-
tom of increafing national wealth. ^ The fcanty
maintenance of the labouring poor, on the other
hand,- is the natural fymptom that things are at a
itand, and their ftarving condition that they are
going faft backwards.

In Great Britain the wages of labour feem,- in
the prefent times, to be evidently more thaa
what is precifely neceflary to enable the labourer
to bring up a family. In order to fatisfy our-
felves upon this point it will not be neceflary to-
enter into any tedious or doubtful calculation of
what may be the lowcft fum upon whrch it is
pofllble to do this. There are many plain fymp-
toms that the wages of labour are no-where in
this country regulated by this loweft rate which
is confiflent with common humanity.

First, in almoft every part of Great Britain
there is a diftinftion, even in the loweft fpecies
of labour, between fummer and winter wages.
Summer wages are always highqfl>^'TKton ac-
count of the extraordinary expence ofibKelr^theY^^^-^-^i
maintenance of a family is moft expenfive in
winter. Wages, therefore, being higheft when
this expence is loweft, it feems evident that they '
are noc regulated by what is neceflary for this A:
CXfcncc; but by the quantity and fuppofedi^^

valuc-^

112 THE NATURE AND CAUSES OF

BOOK value of the work. A labourer, it may be fafd

indeed, ought to fave part of his fummer wages
in order to defray his winter expencej and that
through the whole year they do not exceed what
is neceflary to maintain his family throu^
the whole year. A Have, however, or one abfb-
lutely dependent on us for immediate fubfift-*
ence, would not be treated in this manner. His
daily fubfiftence would be proportioned to his
daily neceffities.

Secondly, the wages of labour do not in
Great Britain fluftuate with the price of provi-
fions. Thefe vary every-where from year to
year, frequently from month to monCh^ But lA
many places the money price of labour remains
uniformly the fame fometimes for half a century
together. If in thefe places, therefore, the la-
bouring poor can maintain their families in dear
years, they muft be at their eafe in times of mo-
derate plenty, and in affluence in thofe of extra-
ordinary cheapnefs. The high price of provi-
fions during thefe ten years paft has not in many
parts of the kingdom been accompanied with
any fenfible rife in the money price of labour.
It has, indeed, in fome^ owing probably more
to the increafe of the demand for labour, than to
that of the price of provifions.

Thirdly, as the price of provifions varies
more from year to year than the Wages of Jabour,
fo, on the other hand, the wages of labour vary
more from place to place' thairihe price of pro-
vifions. The prices of bread and butcher's meat
are generally the fame, or very nearly the fame,

through.

CHAP,
VIII.

^HE WEALtH Of NATIONS. 113

through the greater part of the united kingdom.
Thefe and moft other things which are fold by
retail, the way in which the labouring poor buy
all things, are generally flilly as cheap or cheaper
in great towns than in the remoter parts of the
country, for reafons which I fhall have occafion
to explain hereafter. But the wages of labour
in a great town and its neighbourhood are fre-
quently a fourth or a fifth part, twenty or five-^
and-twenty percent, higher than at a few miles difi-
tance. Eighteen pence a day may be reckoned
the common price of labour in London and its
neighbourhood. At a few miles diftance it falls
to fourteen and fifteen pence. Ten pence may be
reckoned its price in Edinburgh and Its neigh-
bourhood. At a few miles diftance it falls to
eight pence, the ufual price of common labour
through the greater part of the low country of
Scotland, where it varies a good deal lefs than
in England. Such a difference of prices, which
it feeiVis is not always fuflicient to tranfport a
man from one parifh to another, would necefla-
rily occafion fo great a tranfportation of the moft
bulky commodities, not only from one parifli to
another, but from one end of the kingdom, al-
moft from one end of the world to the other, as
would foon reduce them more nearly to a level-
After all that has been Hiid of the levity and in-
conftancy of human nature, it appears evidently
from experience that a man is of all forts of lug-f
gage the moft difficult to be tranfported. If th^
labouring poor, therefore, can maintain their
families in thofe parts of the kingdom where the
Vol. I. I price

114 THE NATURE AND CAUSES OF

^^i^ ^ price of labour is lowc^ they muft be in affluence
where it is higheft.

Fourthly, the variations in the price of la*
bour not only do not correipond cither in place or
time with thofe in the price of provifionSj but
they are frequently quite oppofite.

Grain, the food of the conunon people, is
dearer in Scotland than in En^and, whence
Scodand receives almoU every year very large
fupplies. But Englifh corn muft h? fold dearer
in Scotland, the country to which it is brought,
than in England, the country from which ic
comes; and in proportion to its quality it can-
not be fold dearer in Scotland than the Scotch
corn that comes to the fame market in compe-
tition with it. The quality of grain depends
chiefly upon the quantity of flour or meal which
it yields at the mill, and in this reipedt Englifli
grain is fo much fuperior to the Scotch, that,
though often dearer in appearance, or in propor-
tion to the mcafure of its bulk, it is generally
cheaper in reality, or in proportion to its quality,
or even to the meafure of its weight. The price
of labour, on the contrary, is dearer in England
than in Scodand. If the labouring poor, there-
fore, can maintain their families in the one part of
the united kingdom, they muft be in affluence in
the other. Oatmeal indeed fupplies the common
people in Scotland with the greateft and the beft
part of their food, which is in general much
inferior to that of their neighbours of the fame
rank in England. This difference, however, in
the mode of their fubfiftence is not the caufe, j

but!

wmmmmm

THE WEALtH OP NATIONS.

It?

but the efFeft, of the difference in their wages! ; ^ " ^ p.
though, by a ftrange ixiifapprehenfion, I have
frequently heard it reprefented as the caufe. It
is not be^aufe one man keeps a coach while his
neighbour walks a- foot, that the one 03 rich and
the other poor ; but becaufe the one is rich he
keeps a coach, and becaufe the other is poor he
Walks a-foot. .^^

During the courfe of theiaft century, taking
one year with another, grain was dearer in both
parts of the united kingdonf than during that of'
the prefent. This is a matter of faft which can-
not now admit of any reafonable doubt ; and the
proof of it is, if poffible, ftill more decifive with
regard to Scotland than wirfi regard to England.
It is in Scotland fupported by the evidence of
the public fiars, annual valuations made upon
oath, according to the aftual ftate of the mar-
kets, of all the different forts of grain in every
different county of Scotland* If fuch direft proof
Could require any collateral evidence to confirm
it, I would obferve that this has likewife been
the cafe in France, and probably in moft other
parts of Europe. With regard to France there
is the clearefl proof. But though it is certain
that in both parts of the united kingdom grain
was fomewhat dearer in the laft century than in
the prefent, it is equally certain that labour was
much cheaper. If the labouring poor, there-
fore, CQuld bring up their families then, they
muft be much more at their eafe now. In the
Jaft century, the mofl ufual day-wages of com-
mon labour through the greater part of Scotland

1 2 were

,,6 THE NATURE AND CAUSES OP

BOOK vvere fixpence in fummer and five-pence in win-^
ter. Three ihillings a week, the fame price very
nearly, ftill continues to be paid in fortie parts^
of the Highlands and Weftern Iflands. Through
the greater part of the low country the mod
ufual wages of common labour are now eight-
pence a day; ten-pence, fometimes a {hilling
about Edinburgh, in the counties which border
upon England, probably on account of that
neighbourhood, and in a few other places where
there has lately been a confiderable rife in the
demand for labour, about Glafgow, Carron,
Ayr-fhire, &c. In England the improvements
of agriculture, manufadtures and commerce be-
gan much earlier than in Scotland. The de-
mand for labour, and confequently its price>
muft neceffarily "have increafed with thofe im-
provements. In the laft century, accordingly,
as well as in the prefent, the wages of labour
were higher in England than in Scotland. They
have rifen too confiderably fince that time,
though, on account of the greater variety of
wages paid there in different places, it is more
difEcult to afcertain how much. In 1614, the
pay of a foot foldier was the fame as in the pre-
fent times, eight pence a day. When it was firft
eftabllfiied it would naturally be regulated by
the ufual wages of common labourers, the rank
of people from which foot foldiers are commonly
drawn. Lord Chief Juftice Halerf, who wrote
in the time of Charles II. computes the neceflary
expence of a labourer's family, confifting of fix
perfons, the father and mother, two children able

THE WEALTH OF NATIONS. 117

to do fomething, and two- not able, at ten fhil- ^ " ^ i>.
Kngs a week, or twenty-fix pounds a year. If
they cannot earn this by their labour, they muft
make it up, he fuppofes, either by begging or
ftealing. He appears to have enquired very
carefully into this fubje6t^. In 1688, Mr. Gre-
gory King, whofe Ikill in political arithmetic is
fo much extolled by Doftor Davenant, computed
the ordinary income of labourers and out-fervants
to be fifteen pounds a year to a family, which he
foppofed to confift, one with another, of three
and a half perfons. His calculation, therefore,
though different in appearance, correfponds very
nearly at bottom with that of judge Hales. J3oth
fuppofe the weekly expence of fuch families to
be about twenty pence a head. Both the pecu-
niary income and expence of fuch families have
increafcd confiderably fince that time through
the greater part of the kingdom -, in fome places
more, and in fome left ; though perhaps fcarce
any where fo much as fome exaggerated accounts
of the prefent wages of labour have lately
reprefented them to the public. The price of
labour, it muft be obferved, cannot be afcer-
tained very accurately any where, difiirent prices
being often paid at the fame place and for the
fame fort of labour, not only according to the
difierent abilities of the workmen, but according
to the eafinels or hardnefs of the mafters. Where
wages are not regulated by law, all that we can

* See his fcheme for the 'maintenance of the Poor, in
]J urn's Hiftory of the Poor-laws.

I 3 pretend

■ i8 THE NATURE AND CAUSES OP

^ ^j ^ "^ pretend to determine is what arc the moft ufual 5
and experience ieems to Ibovr that law can never
regulate them properly, though it has often pre<-
tended to do fo»

Th£ real recompence of labour, the real quan-
tity of the neceflaries and conveniencies of life
which it can procure to the labourer, has, during
the courie of the prefent century, increaied per-
haps in a ftill greater proportion than its money
price. Not only grain has become fbmewhat
cheaper, but many other things, from which the
induilrious poor derive an agreeable and whole-
fome variety of /ood, have become a great deal
cheaper. Potatoes, for example, do not at pre-
fent, through the greater p^rt of the kingdomj^
coft half the price which they ufed to do thirty
or forty years ago. The fame thing may be faid
of turnips, carrots, cabbages ; things which were
formerly never raifed but by the fpade, but which
are now commonly raifed by the plough. All
fort of garden fluff too has, become cheaper.
The greater part of the apples and even of the
onions confumed in Great Britain were in the laft
century imported from Flanders. The great im-
provements in the coarfer manufactures of both
linen and woollen cloth furnilh the labourers with
cheaper and better cloathing ; and thofe in the ma-
nufaftures of the coarfer metals, with cheaper and
better inftruments of trade, as well as with many
agreeable and convenient pieces of houlhold fur-
niture. Soap, fait, candles, leather, and fer-
mented liquors, have, indeed, become a good
deal dearer; chiefly froni the taxes which have

been

THE WJgALTH OF NATIONS. ' n?

been kid upon them. The quantity of thefe, ^ ^^1^^ ^'
however, which the labouring poor ^ are under any
neceffity of confuming> is fo very fmall, that
the increafe in their price does not compenfate
the diminution in that of fo many other things.
The common complaint that; luxury extends itfelf
even to the loweft ranks of the people, and that
the labouring poor will not now be contented
with the fame food, cloathing and lodging which
fatisfied them in former times, may convince
lis that it is not the money price of labour
onlyi but it§ real recompence, which* has aug-
mented.

Is this improvement in the circumftances of
the lower ranks of the people to be regarded as
an advantage or as an inconveniency to the fo-
ciety ? The anfwer feems at firft fight abundantly
plain. Servants, labourers and workmen of dif-
ferent kinds, make up the far greater part of
every great political fociety. But what improves
the circumftances of the greater part can never
be regarded as jin inconveniency to the whole.
No fociety can furely be flourifhing and happy,
of which the far greater part of the members
are poor and miferable. It is but equity, be-
fidcs, that they who fcjsd, cloath and lodge the
whole body of the people, Ihould have fuch ^
fliare of the produce of their own labour as tcr
be thcmfelves tolerably well fed, cloathed and
lodged.

Poverty, though it no doubt difcourages,
does not always prevent marriage. It feems even
to be favourable to geperation. A half-ftarved

I 4 Highland

up THE NATURE AND CAUSES OF

^ ^ 9^ ^1 Highland woman frcqucndy bears more tha^
twenty children^ while a"" pampered fine lady is
I 1 1 often incapable of bearing any, and is generally
' ''exhaufted by two or three. Bamennefs, {o fre-
quent among women of fafliion, is very rano
among thoie of inferior ftation. Luxury in tJie
fair fex, while it inflames perhaps the paffion for
enjoynient, feems always to weaken, and fine-
quently to deftroy altogether, the powers of ge-.
aeration, :

But poverty, though it does not prevent the
generation, is extremely unfavourable to the rear-
ing of children. The tender plant is produced^
but in fo cold a foi], and fo fevere a climate, ibon
withers and dies. It is not uncommon, I have
been frequently told, in the Highlands of Scot-
land for a mother who has borne twenty children
not to have two alive. Several officers of great
experience have affured me, that fo far from re-
cruiting their regiment, they have never been
able to fupply it with drums and fifes fi'om all
the foldiers children that were borri in it. A
greater number of fine children, however, is
feldom fcen any where than about a barrack of
foldiers. Very few of them, it feems, arrive at
the age of thirteen or fourteen. In fome places
one half the children born die before they are
four years of age -, in many places before they
are feven; and in almoft all places before they
are nine or ten. This great mortality, however,
will every where be found . chiefly among the
children of the common people, who cannot
afibrd to fend them with the fame (;are as thof^

THE WEALTH OF NATIONS. i2r

of better ftation. Though their marriages are ^ h a p.
generally niorc fruitful than thofe of people of
falhion, a fnaaller proportion of their children
arrive at nnaturity. In foundling hofpitals, and
among the children brought up by parilh cha-
rities, the mortality is ftill greater than among
thofe of the common people.

EvjERY fpecies of animals naturally multiplies
in proportion to the means of their fubfiftence,
and no fpecies can ever multiply beyond it. But
in civilized fociety it is only among the inferior
ranks of people that, the fcantinefs of fubfiftence
can fet limits to the further multiplication of the
human fpecies j and it can do fo in no other way
. than by deftroying a great part of the children
which their fruitful marriages produce.

The liberal reward of labour, by enabling
them to provide better for their children, and
confequently to bring up a greater number, na-
turally tends to widen and extend thofe limits.
It delcrves to be remarked too, that it neceflarily
does this as nearly as poffible in the proportion
which the demand for labour requires. If this
demand is continually increafing, the reward of
labour muft neceffarily encourage in fuch a
manner the marriage and multiplication of la-
bourers, as may enable them to fupply that con-
tinually increafing demand by a continually in-
/ creafing population. If the reward Ihould at any

time be lefs than what was requifite for this pur-
pofe, the deficiency of hands would foon raife
it ; and if it ftiouW at any time be more, their
cxceffivc multiplication would foon lower it t6

this

122 THE NATURE AND CAUSES OF

BOOK this necefiary rate. The market would be fi»
much under-ftocked wich labour in die one cafe^
and {o much over-ftocked in die odier^ as would
loon force back its price to that propter rate which
the drcumftances of the ibciety required. It is in
this manner that the demand for men, like that
for any other commodity, neceflarily regulates
the produ&ion of men ; quickens it when it goes
on too flowly, and ftops it when it advances too
faft. It is this demand which r^ulates and deter-
mines the date of pr(^>agation in all the different
countries of the world, in North America, in
Europe, and in China; which renders it rapidly
IM'Ogreflive in the firft, flow and gradual in the
iecond, and altogether ftationary in the lafl:.

The wear and tear of a flave, it has been laid,
is at the expence of his mailer ; but that of a
free iervant is at his own expence. The wear
an4 tear of the latter, however, is, in reality, as
much at the expence of his mailer as that of the
former. The wages pjdd to journeymen and
lervants of every kind muft be fuch as may
enable them, one with another, to continue the
race of journeymen and iervants, according as
the increaiing, diminiihing, or ilationary demand
of the fociety may happen to require. But
though the wear and tear of a free fervant be
equally at the expence of his mailer, it generally
coils him much Icfs than that of a flave. The
fund deilined for replacing or repairing, if I may
fay fo, the wear and tear of the flave, is com-
monly managed by a negligent mailer or carelefs
overfeer. That deilined for performing the

fame

THE WEALTH OF NATIONS. 123

fame office with regard to the free man, is ma- ^ ^ a p.
naged by the free man himfelf. The diforders
which generally prevail in the oeconomy of the
rich^ naturally introduce themfelves into the
managepnent of the former : The ftrift frugality
and parfimonious attention of the poor 'as natu-
rally eftablifh themfelves in that of the latter.
Under ' fuch different management, the fame
purpofe muft require very diflFerent degrees of
-expcnce to execute it. It appears, accordingly,
from the experience of all ages and nations, I
believe, that the work done by freemen coines
cheaper in the end than that performed by flaves.
It is found to do fo even at Bofton, New York,
afid Philadelphia, where the wages of common
labour are fo very high.

The liberal reward of labour, therefore, as it
is the effeft of increafing wealth, fo it is the caufe
of increafing population. To complain of it, is
to lament over t;he neceflary effed: and caufe of
the greateft public' prolperity.

It defer ves to be remarked, perhaps, that it is
in the progreffive ftate, while the fociety is ad-
vancing to the further acquifition, rather than
when it has acquired its full complement of
riches, that the condition of the labouring poor,
of the great body of the people, feems to be the
happieft and the moft comfortable. It is hard
in the ftationary, and milerable in the declining
flate. The progreffive ftate is in reality the
cheerful and the hearty ftate to all the different
orders of the fociety. The ftationary is dull ;
the declining melancholy.

Thb

124. THE NATURE AND CAUSES OF

Th£ liberal reward of labour^ as it enqpurages
the propagation, fo it increafes the induftry of the
common people. The wages of labour are the
encouragement of induftry, which, like every
other hunnan quality, improves in proportion to
the encouragement it receives. A plentiful fub-
fiftence increafes the bodily ftrength of the -la-
bourer, and the comfortable hope of bettering
his condition, and of ending his days perhaps in
eafe and plenty, animates him to exert that
ftrength to the utmoft. Where wages are high,
accordingly, we fliall always find the workmen
more a&ive, diligent, and expeditious, than
where they are low; in England, for example,
than in Scotland; in the neighbourhood of great
towns, than in remote country places. Some
workmen, indeed, when they can earn in four
days what will maintain them through the week,
will be idle the other three. This, however, is
by no means the cafe with the greater part.
Workmen, on the contrary, when they are liber-
ally paid by the piece, are very apt to over-
work themfelves, and to ruin their health and
conftitution in a few years. A carpenter in
London, and in fome other places, is not fup^
pofed to laft in his utmoft vigour above eight
years. Something of the fame kind happens in
many other trades, in which the workmen are
paid by the piece ; as they generally are in manu-
fadtures, and even in country labour, where-?
ever wages are higher than ordinary. Almoft
every clafs of artificers is fubjeft to fome pecu-
liar infirniity occafioned by cxcefiive applicatioii

!
J

THE WEALTH OF NATIONS* 125

to their peculiar fpecies of work. Ramuzzini, ^ ^ij?*^'
an eminent Italian phyfician, has written a par- <^-y— -; '
ticular book concerning fuch difeafes. We do
not reckon our foldiers the mod induftrious fet ' ^

of people among us. Yet when foldiers have
been employed in fome particular forts of work,
and liberally paid by the piece, their officers
have frequently been obliged to ftipulate with
the undertaker, that they fbould not be allowed
to earn above a certain fum every day, according
to the rate at which they were paid. Till this fti-
pulation was made, mutual emulation and the
defire of greater gain, frequently prompted them
to over- work themfelves, and to hurt their health
by exceffive labour. ExcefTive application dur-
ing four days of the week, is frequently the real
c^ufe of the idlenefs of the other three, {o
much and fo loudly complained of. Great la-
bour, either of mind or body, continued for
fcveral days together, is in moft men naturally
followed by a great defire of relaxation, which,
" if not reftrained by force or by fome ftrong ne-
ceffity, is almoft irrefiftible. It is the call of na-
ture, which requires to be relieved by fome in-C /1/f. J'.,
dulgence, fometimes of eafe only, but fometimes^Tl^ ^ '

too of diffipation and diverlion. If it is not , . c4 * \
complied with, the confequences are often dan-^f^^^'^*'^^^ I
gerous, and fometimes fatal, and fuch 2l% 2i\mo&^y^^' '^^^<^^^* *
always, fooner or later, bring on the peculiar
infirmity of the trade. If matters would always
liften to the diftates of reafon and humanity,
they have frequently occafion rather to mode-
rate, than to animate the application of many of

their:

f ♦

126 THE NATURE AND CAUSE^ O^

BOOK their workmen. It will be (bund, I bdieve, irt
u ^'mj every Ibrt of trade, that the man who works fb
moderately, as to be able to work conftantly, not
only prcferves his health the longeft, but, in the
courfe of the year, executes the gfeatcft quantity
of work. '

Im cheap years, it is pretended, workmen arc
generally more idle, and in dear ones more in-
duftrious than ordinary. A plentiful fubfift-
ence therefore, it has been concluded, relaxes,
and a fcanty one quickens their induftry. That
a little more plenty than ordinary may render
fome workmen idle, cannot well be doubted ; but
that it fhould have this efieft upon the greater
part, or that men in general fliould work better
when they are ill fed than when they are well
fed, when they are dilheartened than when they
are in good fpirits, when they are frequendy fick
than when they are generally in good health,
fccms not very probable. Years of dearth, it is
<• to be obferved, are genially among the common
^^^^ people years of ficknefs and mortality, which
,#^ cannot fail to diminifli the produce of their in-

\/ t'^ ' ^ ^^ years of plenty, ftrvants frequendy leave
^^ ****^^*' their mafters, and truft their fubfiftence to what

id which is deftined for the maintenance of
fervants, encourages matters, farmers elpecially,
to employ a greater number. Farmers upon fuch
occafions expeft more profit from their corn by
maintainiog a few more labouring f^rantSj than

THE WEALTH OF NATJONS. 127

by felling it at a low price in the market^ The ^ " ^ p-
demand for fervants increafes, while the number
of thofe who offer to fupply that demand di-
minifties. The price of labour, therefore, fre-
quently rifes in cheap years.

In years of fcarcity, the difficulty and uncer-
tainty of fubfiftence make all fuch people eager
to return to fervice. But the high price of pro-
vifions, by diminifhing the funds deftined for the
maintenance of fervants, difpofes matters rather
to diminifli than to increafe the number of thofe
they have. In dear years too, poor independ-
ent workmen frequently confume the litde IJocks
with which they had ufed to fupply themfelves
with the materials of their work, and are ob-
figed to become journeymen for fubfiftence.
More people want employment than can eafily
get it; many are willing to take it upon lower
terms than ordinary, and the wages of both fer-
vants and journeymen frequently fink in dear
years.

Masters of all forts, therefore, frequendy
make better bargains with their fervants in dear
than in cheap years, and find them more humble
and dependent in the former than in the latter.
They naturally, therefore, commend the former
as more favourable to induftry. Landlords and
farmers, befides, two of the largeft clafles of
matters, have another reafon for being pleafed
with dear years. The rents of the one and the
profits of the other depend very much upon the
price of provifions. Nothing can. be more ab-
furd, however, than to imagine that men in ge-

3 neral

ii8 THE NATURE AND CAUSES OF

J o o K nerd fhould work lefs when they work for them*
felves, than when they work for other people-
A poor independent workman will generally be
more induftrious than even a journeyman who
works by the piece. The one enjoys the whole
produce of his own induftry ; the other fhares it
with his maften The one, in his feparate inde-
pendent ftate, is lefs liable to the temptations of
bad company, which in large manufaftories fo
Trequently ruin the morals of the other. The
fuperiority of the independent workman over
thofe fervants who are hired by the month or by
the year, and whole wages and maintenance are
the fame whether they do much or do little, is
likely to be ftill greater. Cheap years tend to
increafe the proportion of independent workmen
to journeymen and fervants of all kinds, and
dear years to diminilh it.

A French author of great knowledge and in-
genuity, "Mr. Meffance, receiver of the taillies
in the eleftion of St. Etienne, endeavours to
fiiow that the poor do more work in cheap than
in dear years, by comparing the quantity and
value of the goods made upon thofe different
occafions in three different manufactures ; one
of coarfe woollens carried on at Elbeuf 5 one of
linen, and another of filk, both which extend
through the whole generality of Rouen. It ap-
pears from his account, which is copied from
the regifters of the public offices, that the quan-
tity and value of die goods made in all thofe
three manufaftures has generally been greater in
cheap than in dear years > and that it has always

V been

THE WEALTH 09 NATIONS. 129

oeen greateft in the cheapeft, and leaft iri the ^ " ^ p*
deareft years. All the' three feem to be itation-
Ary manufadures, or which, though their pro-
duce may vary fomewhat from year to year, are
upon the whole neither going backwards nor
forwards.

The manufadure of linen in Scotland, and
that of coarfe woollens in the weft riding of
Yorkfhire, are growing manufaftures, of which
the produce is generallyj though with fome va-
riations, increafmg both in quantity and value.
Upon examining, however, the accounts which
have been publifhed of their annual produce, I
have not been able to obferve that its variations
have hacJ any fenfible connexion with the dear-
nefs or cheapnefs of the feafons. In 1740, a year
of great fcarcity,. both manufactures, , indeed, ap-
pear to have declined very coi^defrably.. But iii
1756, another year of great fcarcity, the Scotch
manufafture made more than ordinary advances.
The Yorkfhire manufafture, iiideed, declined^
and its produce did not rife to what it had been
in 1755 ^^11 1766, after the repeal of the Ameri-
can ftamp aft. In that and the following year it
greatly exceeded what it had ever been before,
and it has continued to advance ever finde.

The produce of all great manufactures for dif-
tant fale mutl neceffarily- depend, not fo much
upon the dearnefs or cheapnefs of the feafons in
the countries where they are carried on, as upon
the circumftances which affedt the demand in the
countries where they are confumed ; upon peace
or war,' upon the profperity or declenfion of
. Vol. I. K other

130 THE NATUBE AND CAUSES OF

B o o K other rival manufaAures, and upon the good or
bad humour of their principal cuftomers. A
great part of the extraordinary work, befides,
which is probably done in cheap years, never
enters the public regifters of manufa£tures.
The men fervants who leave their mafters be-
come independent labourers. The women re-
turn to their parents, and commonly fpin in or^
der to make cloaths for themfirlves and their fa-
milies. Even the independent workmen do not
always work for public fale, but are employed
by fbme of their neighbours in manufa&ures for
family ufe. The produce of their labour, there-
fore, frequently makes no figure in thofe public
regifters of which the records are. ibmetimes
publilhed with lb much parade, and from which
our merchants and manufa&urers would often
vainly pretend to announce the prolperity or de-
clenfion of the greateft empires.

Though the variations in the price of labour,
not only do not always correfpond with thofe in
the pwice of provifions, but are frequently quite
oppofite, we mufl not, upon this account, ima-
gine that the price of provifions has no influence
upon that of labour. The money pnce of la- .
bour is necefiarily regulated by two circum-
ftapces i the demand for labour, and the price of
the nccelTaries and conveniencies of life. The
demand for labour, according as it happens to
be increafiRg, ftationary, or declining, or to re-.
quire an increafing, flationary, or declining po-
pulation, determines the qiiantity of the necefla-^
ries and conveniencies of life which muft be»

given

THE WEALTH OF NATIONS^ tSi

^ven to the labourer ; and the money price of ^ ^^^ ^«
labour is determined by what is requifice for
purchafing this x}iiancity« Though the money
price of labour, therefore, is fometimes high
nvhere the price of provifions is low, it would be
Hill hi^er, the demand continuing the fame, if
the price of provifions was high.

It is becaufe the demand for labour increafes
in years of fudden and extraordinary plenty, and
diminiihes in thofe of fudden and extraordinary
fcarcity, that the money price of labour fbme-*
times rifes in .the one, and finks in the other.

In a year of fudden and extraordinary plenty,
there are funds in die hands of many of the em-
ployers of induflry, fufficient to maintain and
employ a greater number of induflrrious people
than had been employed the year before; and
this extraordinary number cannot always be had.
Thofe mailers, therefore, who want more work-
men, bid againfi one anodier, in order to get
them, which fometimes raifes both the real and
die money price of their labour.

The contrary of this happens in a year of fud-
den and extraordinary fcarcity. .The funds def-
dned for employing induftry are lefs than they
had beea the year before. A confiderable num-
ber of people are thrown out of employment,
who bid againft one another, in order to get it,.
which fometimes lowers bodi the real and the
money prrce of labour. In 1740, a year of ex*
traordinary fcarcity, many people were willing
to work for bare fubfiilencc. In the fucceedlng

K 2 years

13* THE NATURE AND CAUSES OF

B 0^0 K years of plenty, it was more difficult to get la-
bourers and fervants.

The fcarcity of ia dear year, by diminifhing

the demand for labour, tends to lower its price^

: as the high price of provifions tends to raife it*

'[ The plenty of a cheap year, on the contrary, by

^increafing the demand, tends to raife the price

of labour, as the cheapnefs pf provifions tends to

lower it. In the ordinary variations of the price

of provifions, thofe two oppofite cayfes feem to

counterbalance one another; which ^ is probably

in part the reafon why the wages of labour arc

every-where fo much more fteady and permanent

than the price of provifions*

The increafe in the wages of labour necefTarily
increafes the price of many conrtmodities, by in-
creafuig that part of it which refolves itfelf into
wages, and fb far tends to diminifh their con-
fumption both at home and abroad. The fame
caufe, however, which raifes the wages of labour,
the increafe of flock, tends to increafe its pro-
duftive powers, and to make a fmaller quantity
of labour produce a greater quantity of work.
The oWher of the ftock which employs a great
number of labourers, necefTarily endeavours, for
his own advantage, to make fuch a proper divi- ^
fion and diflribution of employment, that they
may be enabled to produce the greatcft quantity
of work poflible. For the fame reafon, he en-
deavours to fupply them With the beft machinery
which either he or th^y can think of. What
takes place among the labourers in a particular

workhoufe.

THE WEALTH OT NATIONS, ijj

l^rorkhoule, takes place, for the fame reafon, ^ ^^^^ ^*
among thole pf a great fbciety. The greater
their number, the more they naturally divide
themfelves into different claffes and fubdivifions
of employment. More heads are occupied in
inventing the moft proper machinery for execut-
ing the work of each, and it is, therefore, more
likely to be invented. There are many commo-
dities, therefore, which, in ^confequence of thefe
improvements, come to be produced by fo much
lefs labour than before, that the increafe of its
price is more than compenfated by the diminu-
tion of its quantity.

■»^

CHAP, IX.

0/ the Profits of Stock.

THE rife and fall in the profits of ftock
depend upon the fame caufes with the rife
and fall in the wages of labour, the increafing or
declining ftate of the wealth of the fociety ; but
thofe caufes affedt the one and the other very dif-
ferently.

The increafe, of ftock, which raifes wages,
tends to lower profit. When the ftocks of many
rich merchants are turned into the fame trade,
their mutual competition naturally tends to
lower its profit; and when there is a like in-
V creafe of ftock in all the different trades carried

K 3 on

%
*

t34 THE NATURE AND CAUSES OF

B o^o K ^jj ift the fame fociety, the fame competidoA

w»i*v*w Mtift produce the fame efFe^ in them all.

t vH v^'A^T is not eafy, it has already been obferved, ta
li^^^i^^ ifcertain what are the average wages of labour
ft^x^^^ ^i^i^^^ ^^ ^ particular place, and at a particular
i ^"^y^./ ^tAmc. ' We can> even in this cafe, feldom deter-
"^ ^ mine more than what are the m<^ ufual wages.
But even this can feldom be done with regard to
the profits of ftock* Profit is fo very fiuduat-
ing, that the perfon who carries on a particular
trade cannot always tell you himfelf what is the.
average of his annual profit. It is afiefted, not
only by every variation of price in the commo-
dities which he deals in, but by the good or bad
fortune both of his rivals and of his cuftomers,
and by a thoufand other accidents to which
goods when carried either by fea or by land, or
even when ftored in a warehoufe, are liable. It
varies, therefore, not only from year to year, but
from day to day, and almoft from hour to hour.
To afcertain what is the average profit of all the
different trades carried on in a great kingdom,
muft be much more difficult; and to judge of
what it may have been formerly, or in remote
• periods of time, with any degree of precifion,
-muft be altogether impoflible.^

But -though it may be impoflible to deter-
mine with any degree of precifion, what are or
were the average profits of ftock, either in the
prefent> or in ancient times, fome notion may
bt formed of them from the intereft of money*
It may be laid down as a maxim, that wherever
a great deal can be made by the ufe of money.

3 a great

ft ■

* «

THE WEALTH OF NATIONS. 135

a great deal will commonly be given for the ufe ^ ^^^ **•
of it J and that wherever little can be made by it, x^m^^j
fefs will commonly be given for it. According^
therefore, as the ufual market rate of intereft va-
ries in any country, we may be afllired that the
ordinary profits of flock muft vary with it, myft
fink as it finks, and rife as it rifes. The progrcls
K)i intereft, therefore, may lead us to form fomc t

notion of the progreis of profit. ' | r^^ j^

By the 37th of Henry VIII. all intereft abpve \V% r>"^/,
ten per cent, was declared unlawful. More, it ^i// Ifc'' '
feerhs, had fometimes been taken before that.
In the reign of Edward VI. religious zeal pro-'
hibited all intereft. This prohibition, however,
like all others of the fame kind, is faid to have
produced no efFed:, and probably rather increafed
than diminiihed the evil of ufury. The ftatute
of Henry VIII. was revived by the 13th of
Elizabeth, cap. 6. and ten per cent continued
to be the legal rate of intereft till the 21ft of
James L when it was reftrifted to eight per
cent. It was reduced to fix per cent, foon after
the reftoration, and by the 12th of Queen Anne,
to five per cent. All thefe different ftatutory
regulations feem to have been made with great
propriety. They feem to have followed and not
to have gpne before the market rate of intereft,
or the rate at which people of good credit ufually
borrowed. Since the time of Queen Anne, five
per cent, feems to have been rather above than
below die market rate. Before the late war, the
government borrowed at three per cent, i and
people of good credit in ;he capital, and in

K 4 many

136 THE NATURE AND CAUSES OF

3 00. K rnany other pacts .of the kingdom, at three and at»
K, .^^-.^ half, four, aiid four and a half per cent.

Since the time of Henry VIII. the wealth and
revenue of the country have been continually
advancing, and, in the courfe of their progrefs,
their pace feems rather tp have been gradually
accelerated than retarded. They feem, not only
to have been going on, but to have been going
on fafter and fafter.. The wages of labour have
been continually increafing during the fame pe-
riod, and in the greater part of the different
branches of trade and rpanufaftyres the profits of
ftock have been diminifliing.
> f ij\ ^^ generally requires a greater ftock to carry

'•; ^^y-.! y on any fort of trade in a great town than in a
It' » "'^ country village. The great ftocks erpployed in

\ >;|;i ^, . every branch of trade, and the number of rich
\ ^ V ^ \ competitors, - generally reduce the rate of profit

^.'' ' in the former below what it \s in the latter. But

the wages of labour are generally higher in a
great town than in a country village. In a
thriving town the people who have great ftocks
to employ, frequently cannot get the number of.
workmen they want, and therefore bid againfl;
one another in order to get as many as they can,
which raifes the wages of labour, ^d lowers the
profits of ftock, In the remote parts of the
country there . is frequently not ftock fufficient
to employ all the people, who therefore bid
^gainft one another in order to get employment,
which lowers the wages pf labour, and raifes
f he profits of ftock,

• In

THE WEALTH OF NATIONS. 13^

In Scotland, * though the legal rate of intereft ® ^^ ***^
is the fame as in England, the market rate is ur^- j j^}^v
rather higher. People of the beft credit there \\J^n/^
feldom borrow under five per cent. Even pn-^^vV/^
vate bankers in Edinbur^ givfe four per cent. * /^
upon their promiflbry notes, of which payment ^
either in whole or in part may be demanded at
pleaflire. Private bankers in London give no
intereft for the money which is depofited with
(hem. There are' few trades which cannot be
carried on with a fmaller. ftpck in Scotland than
in England. The common rate of profit, there-
fore, muft be fomewhat greater. The wages of
labour, it has already been obferved, are lower
^n Scotland than in England. The country too
is not oply much pborpr, but the fteps by which
it advances to a better condition, for it is evi-
dently advancing, feem to be much flower and
more tardy.

The legal rate of intereft in France has
not, during the courfe of the prefent century,
been always regulated by the market rate *. la
1720 intereft was reduced from the twentieth ta
the fiftieth penny, or from five to two per cent..
In 1724 it was railed to the thirtieth penny, or
to 37 per cent. In 1725 it was again raifed to
the twentieth penny, or to five per cent. In
1766, during the adminiftration of Mr. Laverdy,
it wa^ reduced to the twenty -fifth penny, or to
four per cent. The Abbe Terray railed it after-
yrards to the old xate of five per cent. The fqp-

f 3ee Penifart^ Article 1*aax des Intfret9| tOQi. iii, p. i8t

pofed

,38 THE NATURE AND CAUSES OF

BOOK pofed purppfe of many of thofc violent redufUons
of intereft was to prq»rc the way for reducing
that of the public debts ; a purpofe which has
fometimes been executed. France is perhaps in
the prefent tinner not fo rich a country as Eng*
land ; and though the legal rate of intereft has in
France frequently been lower than in England,
the market rate has generally been higher ; for
there^ as in other countries, they have ieveral
very fafe and eafy methods of evading the law.
The profits of ti'adc, I have been aiTured by
Britiih merchants who had traded in both coun-
tries, are higher in France than in England; and
it is no doubt upon this account that many Britifli
fubjefts chufc rather to employ their capitals in
a country where trade is in difgrace, than in one
where it is highly rclpefted. The wages of la-
bour are lower in France than in England.
When you go from Scotland to England, the dif-
ference which you may remark between the drefe
and countenance of the common people in the
one country and in the other, fufficiently indi-
cates the difference in their condition. The
contr'aft is ftill greater when you return from
France. France, though no doubt a richer
country than Scodand, feems not to be going
forward fo faft. It is a common and even a po-
pular opinion in the country, that it is going back-
wards; an opinion which, I apprehend, is' ill-
founded even with regard to France, but which
nobody can poffibly entertain with regard to

Scodand, who fees the country now, and who faw
ic twenty or thirty years ago.

The

THE WEALTH OP NATIONS, 139

' Thb province of Holland, on the other hand, ^ '^^ ^*
in proportion to the extent of its territory and Uii y*— > I A
the number of its people, is a richer country ^ , liA*'^^^ '
than England. The government there borrow \^ sAjT^
at two per cent., and private people of good ^
credit at three. The wages of labour are faid ^
to be higher in Holland than in England, and
the Dutch, it is well known, trade upon lower
profits than any people in Europe. Xhe trade
of Holland, it has been pretended by fome peo-
ple, is decaying, and it may perhaps be true
that fome particular branches of it are fo. But
thefe fymptoms feem to indicate fufficiently that
there is no general decay. When profit dimi-
nifties, merchants are very apt to complain that
trade decays ; though the diminution of profit is
the natural efFedt of its pro(perity> or of a greater
ftock being employed in it than before. During
the late war the Dutch gained the whole carry-
ing trade of France, of which they ftill retain a
very large {hare. The great property which
they poilefs both in the French and Engliffi
funds, about forty millions, it is faid, in the
latter (in which I fufped, however, there is a
confiderablc exaggeration) ; the great fums which
they lend to private people in countries where
the rate of intereft is higher than in their own,
are circuniftances which no doubt demonftratii
^the redundancy of their ftock, or that it has in^
creafcd beyond what they can employ with tole*
rable profit in the proper buiinefs of their own
country : but they do not demonfbate that that
bufme^ has decreafed. As the capital of a

. - private

I40 THE NATURE AND CAUSES OF

B o^o K private man; though acquired by a particular
trade> may incr^afe beyond what he can employ
in it, and yet th^t trade continue to increafe too i
fo may likewife the capital of a great nation.

In Qur North American and Weft Indian co^
lonies, not only the wages of labour, but the
intereft of money, and confequenriy the profits
of ftock, are higher than in England. In the
different colonies both the legal and the market
rate of intereft run froni fiK to eight per cent.
High wages of labour and high profits of ftock^,
however, are things, perhaps, which fcarce ever
go together, except in the peculiar circumftances
of new colonies.' A. new colony muft. always
for fQme time be more iinder-ftocked in propor^
tioii to the extent of its territory^, and more un-r
dpr-peopled in proportion to the extent of its
ftock, than the greater part of other countries.
They have nwre land than they have ftock to
cultivate. Wh^t they have, therefore, is ap-
plied to the cultivation only of what is moft fer-
tile and mqft favourably fifuated, the land near
the fca fhore, and a^long ^:he banks of navigable
rivers. Such land too is frequently purchaled
at a price below the value even of its natural
produce. Stock employed in the purchafe and
improvement of fuch lands muft yield a very
large profit, and confequently afford to pay a very
large intereft. Its rapid accumulation in fo pro^
fitable ,an employment enables the planter to in-
creafe the number of his hands, fafter than he can

find them in a new fettlement. Thofe whom he
can find, therefor^, - are very liberally rewarded.

THE WEALTH OF NATIONS. 141

As the colony increafes, the profits of ftock gra- ^ ha', pL
dually diminilli. When the moft fertile and beft
iituated lands ha^^e been all occupied, lefs profit
can be made by the cultivation of what is infe-
rior both in foil and fituation, and lefs intereft
can be afforded for the (lock which is lb employ-
ed. In the greater part of our colonies, accord-
ingly, both the legal and the market rate of in-
tereft have been confiderably reduced Muring the
■courfe of the prefent century. As riches, im-
provement, and population have increafed, in-
tereft has declined. The wages of labour do not [
fink with the profits of ftock. The demand fori -
labour increafes with the increafe of ftock. what J
ever be its profits; and after thefe are dimi/
nifhed, ftock may not only continue to increafe,
but to increafe much fafter than before. It is •
with induftrious nations who are advancing in
the acquifition of riches, as, with induftrious
individuals. A great ftock, though with fmall/
profits, generally increafes fafter than a (xnalll
ftock with great profits. Money, fays the pro-
verb, makes money. When you have got a
litde, it is often eafy to get more* The great
difficulty is to get that little. The connexion
between the increafe of ftock and that of. in-
duftry, or of the demand for ufeful labour, has
partly been explained already, but will be ex-
plained more fully hereafter in treating of the ac-
cumulation of ftock.

The acquifition of new territory, or of new
branches of trade, mayfometimes raife the pro-
fits of ftock, and with them the intereft of money, ,

even

-•4« THE NATURE AND CAUSES OF

BOO K even m a country which is fiifl: ad\rancing in the
acquifition of riches. The ftock of the country
not being fufHcient for the whole acceflion of
bufmeiii^ which fuch acquifitions prefent to the
different people among whom it is divided, is
applied to thoie particular branches only which
afford the greateft profit. Part of what had be-
fore been employed in other trades, is neceflarily
withdrawn^ from them, and turned into fome of
die new and more profitable ones* In all thof(r
did trades, therefore, the competition comes to
be Icfs riian before. The market comes to be
lels fully fupplied .with many different forts of
goods. Their price ncceflarily rifes more or
kfs, and yields a grea^ profit to thofe who deal
in them, who can, therefore, afford to borrow at
a higher intercfL For fome time after the con^
clufion of the late war, not only private people
of the beft credit, but fome of the greateft com-
panies in London, commonly borrowed at five
per cent, who before that had not been ufed to
pay more than four, and four and a half per cent.
The gr^at acceflion both of territory and trade>
by our acquifitions in North America and the
Wefl Indies, will fufficiently account for this,
without fuppofing any diminution in the capital
ftock of the fociety. So great an acceffion of
new bufinefs to be carried on by the old ftock,
muft neceffarily have diminifhed the quantity
{Employed in a great number of particular
branches, in which the competition being lefs,
'the profits muft have been greater. I fhall here-
after have occafion to mention the reaibns which

difpofe*

THE WEALTH OF NATIONS, 143

difpofe me to believe that the capital ftbck of c h^a p.
Great Britain ,was not diminifhed even by the
enormous expence of the late war.

The diminution of the capital flock of the fo-
ciety, or of the funds deftined for the main- -
tenance of induftry, however, as it ' lowers the ;
wages of labour, fo it raifes the profits of ftock,
and confequently the interell of money. By the
Wages *' of labour being lowered, the owners of
what ftock remains in the fociety can bring
their goods* at lefs expence to market than
before, and lefs ftock being employed in fupply-
ing the market than before, they can fell them
dearer. Their goods coft them lefs, and they
get more for them. Their profits, therefore,
being augmented at both ends, can well afford a
large intereft. The great fortunes fb fuddenly
and fo eafily acquired in Bengal and the other
JSritifh fettlements in the Eaft Indies, may farisfy
us that, as the wages of labour *are very low, fa
the profits of ftock are very high in thofe ruined
Countries. The intereft of money is proportion-
ably fo. In Bengal, money is frequently lent to
the farmers at forty, fifty^ and fixty per cent, and
the fucceeding crop is mortgaged for the pay-
ment. As the profits which can afford fuch an
intereft muft eat up almoft the whole rent of the
landlord, fo fuch enormous ufiiry muft in its
turn eat up the greater part of thofe profits.
Before the fall of the Roman republic, a ufiiry
of the fame kind feems to have been common in
the provinces, under the ruinous adminiftration
of their procopfuls. The virtuous Brutus lent

money

r./"

{

144 THE Nature and causes op

B 0^0 ^ftioncy in Cyprus at cight-and-forty per cent, tii

\mmm^'mmJ wc Icam ffom thc letters of Cicero.

In a country which had acquired that full
complement of riches which the nature of its foil
and climate, and its fituation with refpeft to
other countries,, allowed it to acquire; whic^h
could, therefore, advance no further, and which
was not going backwards, both the wages of la-
bour and the profits of ftock would probably be
. very low* In a country fully peopled in propor-
tion to what either its territory could maintain
or its ftock employ, the competition for employ-
ment would neceflarily be fo great as to reduce
the wages of labour to what was barely fulEcient
to keep up the number of labourers, and, the
country being already fully peopled, that num-
ber could never be augmented. In a country
fully ftocked in proportion to all the bufinels it
had to tranfaft, as great a quantity of ftock^
would be emptoyed in every particular branch
as the nature and extent of the trade would admit*
The competition, therefore, would every-where be
as great,^ and confequently the ordinary profit as
low as poflible.
' f\ But perhaps no country has ever yet arrived
\'* at this degree of opulence. China leems to have
been long ftationary, and had probably long ago
acquired that full complement of riches which
is confiftcnt with the nature of its laws and infti-
tutions. But this complement may be n>uch
inferior to what, with other laws and inftito-
tions, the nature of its foil, climate, and fitua-
tion might admit of. A country which neglcft%

tHE Wealth of NATtdNs. J45

^r defplfes foreign <:ommirec> and which ddinits chap.
the veflela of foreign nation? into one or two of
its ports anljTj cannot tranfad the fame quantity
of bufin€& which it might do with different lawa
and inftitutions. In a country tooj wherei though
the rich or the owners, of large capxtdh enjoy a
gfyod deal of fccurity, the jH)or or the owners of
fmall capitals enjoy fcarce any, but are liable^
yader the pretence of juftice, to be pillaged and
plundered ^t any time by the inferior manda««
rines, the quantity of ftock employed in all thi
different -branches of bufmefs tranfafted within
ifej can never be equal ta what the nature and
extent of that bufinefe -might admit* In every
different branch, the opprefTion of the poor muft
eftablifh the monopoly of the rich, who, by en-
groiCng the whole trade to themfelves, will be
able to make very large profits. Twelve per

I cent, accordingly is faid to be the common in*
^dheft of money in China, and the ordinary pro-*
fits of ftock muft be fulHcient to afford this large
imereft. •

A DEFECT in the law may fometiraes raife the
rate of intercft confidcrably above what the con-

' dition of the country, as to wcakh or poverty,
would requircfc When the law does not enforce
the performance of contra<5ls> it puts ^11 bor-
rowers nearly upon the fame footing with bank^
rupts or people of doubtful credit in better regu-
lated countries* The uncertainty of recovering
his money makes the lender exa<5k the fame ufti-
rious intercft which h ufually required from
bankrupts. Among the barbarous nations who
Vol. I. L over-

t4d THE NATURE AND CAUSES O!'

B o o K ever-run the wcftcrn provinces of the Romift
empire, the performance of contra6b was left
for many ages to the faith of the contrafting
parties. The courts of juftice of their kings
feldom intermeddled in it. The high rate of
intereft which took place in thofe ancient times
may perhaps be partly accounted for from this
cauie.

When the law prohibits intereft altogethcri
it does not prevent it. Many people muft bor-
row, and nobody will lend without fuch a con-
fideration for the ufe of their money as is fuit-
able, not only to what can be made by the ufe
of it, but to the difficulty and danger of* evading
the law. The high rate of intereft among all
Mahometan nations is accounted for by Mr.
Montefquieu, not from their poverty, but partly
from this, and partly from the difEcuky of re-
covering the money.

The loweft ordinary rite of profit muft always
be fomething more than what is fufEcient to
compenfate the occafional lofles to which every
employment of ftock is expofed. It is this fur-
plus only which is neat or clear profit. What is
called grofs profit conriprehends frequently, not
only this furplus, but what is retained for com-
pcnfating fuch extraordinary lofles. The intereft
which the borrower can afford to pay is in pro-
portion to the clear profit only.

The loweft ordinary rate of intereft muft, in
the fame manner, be fomething more than Effi-
cient to compenfate the occafional lofles to which
lending, even with tolerable prudence, is ex-

pofcd^

•

« 4

THE WEALTH OF NATIONS. 147

pofed* Were it not more, charity or fricndlhip ^ "^^ ^*
could be the only motives for lending.

In a country which had acquired its full com-
plement of riches, where in every particular
branch of bufinefs there was the greateft quantity
of ftock that could be employed in it, as the
ordinary rate of clear" profit would be very fmall,
fo the ufual nnarket rate of intereft which could
be afforded out of it, would be fo low as to ren-
der It impoflible for any but the very wealthieft
people to live upon the intereft of their money.
All people of fmall or middling fortunes would
be obliged to fuperintend themfelves the em-
ployment of their own ftocks. It would be ne-
ceffary that almoft every man fhould be a man of
bufinefs, or engage in fome fort of trade. The
province of Holland feems to be approaching
near to this ftate. It is there unfafliionable not
to be a man of bufinefs. Necefllty makes it
ufual for almoft every man to be fo, and cuftom
every where regulates falhion. As it is ridicu-
lous not to drefs, fo is it, in fome meafure, not
to be employed, like other people. As a man of
a civil profeflion feems awkward in a camp or a
garrifon, and is even in fome danger of being
dcfpifed there, fo does an idle man among men of
bufinefe.

The higheft ordinary rate of profit may be
iuch as, in the price of the greater part of com-
modities, eats up the whole of what fliould go to
the rent of the land, and leaves only what is fuf-
ficient to pay the labour of preparing and bring-

L 2 ing

U9 TH& NATURE ANP CAUSES OP

^ ^j ^ '^ ing them to marki^t, according to the loweft rate
y,^y-i^ at which labour caq any-where be paid, the .bare
fubfiftence of the labourer. The workman m^ft
always have been fed in fome way or other while
he was about the work; but the landlord may
not always have been paidi The profits of the
trade which the fervants of the E^ft India Com-
pany carry on in Bengal may not perhaps be very
far from this rate.
*W^ The proportion which the ufual market rate

1^^^ of intereft ought to bear to the ordinary rate of

(X/^'iF^^ clear profit, necelTarily varies as profit rifes or
V^V^r A^ i f^^* Poubie intereft is in Great Britain

\V' r^^\ ^ I reckoned, what the merchants call, a good, mo-
^'' Jv (.derate, reafonable profit; terms which I ap-

'^'v^^' '^ ' prehcnd mean no more than a common and

vfual profit. In a country where the ordinary
rate of clear profit is eight or ten per cent., it
may be reafonable that one half of it fhould go
to intereft, wherever bufinefs is carried on with
borrowed money. The ftock is at the rifle of
the borrower, who, as it were, infures it to die
fender; and four or five per cent. may> in the
greater part of trades, be both a fuificient pro-
fit upon the riik of this inforance, and a fuf-
ficieht recompence for the trouble of employ-
ing the ftock. But the proportion between in-
tereft and clear profit might aot be the fame in
countries where the ordinary rate of profit woa
either a good deal lower, ox a good deal higher,.
If it were a good deal lower, one half of it
perhaps could not be afibrded for intercAi and

imore

THE WEALTH OP NATIONS. 14^

more might be afforded if it were a good deal <>^ ^ f>

higher.

I ji. countries which are faft advancing to
riches, the low rate of profit may, in the price of
many commodities, compenfate the high wages of
labour, and enable thofe countries to fell as cheap
a& their lefs thriving neighbours, among whom
the wages of labour may be lower.

In reality high profits tend much more to raife
the price of work than high wages. If in the
linen manufafture, for example, the wages of the
different working people, the flax-dreflers, 'the
fpinners,, the weavers, &cc. fhould, all of them,
be advanced two pence a day ; it would be ne-
ceffary to heighten the price of a piece of linen
only by a number of two pences equal to the
number of people riiat had been employed about
it, multiplied by the number of days during
which they had been fo employed. That part of
the price of the commodity which refolved itfelf
into wages would, through all the different
ftages of the manufafture, rife only in arithme-
tical proportion to this rife of wages. But if the
profits of all the different employers of thofe
working people Ihould be raifed five per cent,
that part of the price of the commodity which
refolved itfelf into profit, would, through all
the different ftages of the manufacture, rife in
geometrical proportion to this rife of profit. The
employer of the flax-drefTers would in felling his
flax require an additional five per cent, upon the
whole value of the materials and wages which
he advanced to his workmen. The employer ©f

L 3 . the

ijo THE NATURE AND CAUSES OF

B o o K ^e fpinners would require an additional five per
cent, both upon the advanced price of the flax
and upon the wages of the fpinners. And the
employer of the weavers would require a like
five per cent, both upon the advanced price of
the linen yarn and upon the wages of the weavers.
In raifing the price of commodities the rife <^
wages operates in the fame manner as fimple
intereft does in the accumulation of debt* The
rife of profit operates like compound interelL
Our merchants and mafter-manufadurers com-
plain much of the bad efiefts of high wages in
raifmg the price, and thereby leffcning the fale
of their goods both at home and abroad. They
fay nothing concerning the bad efFefts of high
profits. They are filent with regard to the per-
nicious effedts of their own gains. They com-
plain only of thofc of other people.

THE WEALTH OF NATIONS.

»J«

C HAP. X.

Of Wflges and Profit in the different 'Employments

of Labour and Stock, '

TH E whole of the advantages . and difad- chap.
vantages of the different employments of
labpyr ^nd ftogk jxiuft, in the fame neighbour-
hood, be either perfedly equal or continually
tending to equality. If in the fame neighbour-
hood, thet-e was any employnient evidently either
more or lefs advantageous than the reft, fo many
people wQuld crpwd into it in the one cafe, and
fo many would deferf it in the other, that its ad-
vantages would foon return to the level of other
employments, Thi§ at le^ would be the cafe
in a fociety where thing? were l^ft to follow
their natural courfe, wher^ there wa3 perfedt
liberty, and where every man was perfeftly free
both to chufe what occupation he thought proper,'
and ^Q change it as often as he thought proper.
Every man's intereft would prompt him to feek
the advantageous, and to Ihun the difadvantageous
employment.

Pecuniary wages and profit, indeed, arc
every- where in Eurbpe eiijtremely different ac-
cording to the different employments of lab9ur
and ftock. But this difference arifes partly from
certain circumftances in the employments them-
felves, which, cither really, or at leaft in the
imaginations of men, make up for a fmall pecu-

li 4 niajy

ij3 THE NATURE AND CAUSES Of

BOOK niary gain in fonae, and counter-balance a greso:
L, „- ^r one in others ; and partly frorn the policy of Europe,

>hieh no-where leaves things at pcrfeft liberty.
The particular confideration of thofe circum^

(lances and of that ppHcy will divide i;ht9 chapttr

jntp two parts,

PARTI.

fnequalities arijingfrom the Nature of the Employ^

merits themfelves.

^yHE fiye following arc th^ principal circunfi-»
ftances which, fo far as I have been able to
pbfcrve, make up for a fmall pecuniary gain in
fome employments, and counter-balance a great
one in others: firft, the agrceablencfs or difagree-
' ablcnefs of the employments themfelves ; fecondly,
the cafinefs aiid cheapnefs, or the difficulty and
cxpence of learning them ; thirdly, the conftancy
or incqnftancy of employment in them ; fourthly,
^ ^ the fmall or great truft which muft be rcpofed in

> Mm. ^>^t«^ ^>>l^<>fc "^ho exercife them 5 and fifthly, the proba-
-^cji^ ,77^4 J; ^bility or improbability of fucccfs in them.
J.-, ^^ . . First, The wages of labour vary with the

' hu^ iXf.'^ ^ eafe or hardflaip, the cleanlinefs . or dirtincfs, the'
U. of ^^ htonoiirablenefs or difhonourabfchefs of the em-
^y£, ploynncnt. Thus in nioft places, take the year
cr j/ round, a journeyman taylor earns left than a

; -^*^-<^A ^Journey rnan weaver. His work is much eafien
H^-::< t <j<yu/«i^A journey nnan weaver earns lefs than a joumey-
:. VI ii-a./ man finida. His work is not ahvays eafier, but

" -p4 / -^ ^ A^ ^ much ckanlier. A jmirneyman blackfmith,

^ /%* ' a/ vi: '/iu<? .'/?u.c€4^^:K-ij. . - ' though

THE WEALTH OF NATIONS. 153

though an artificer, fcldom earns fo much in c i» a p.
twelve hours as a collier, who is only a labourer,
does in eight. His work is not quite fo dirty,
is lefs dangerous, and is carried on in day-light,
and above ground. Honour makes a great part
of the reward of all honourable profeflions. In
point of pecuniary gain, all things confidered,
they are generally under-recompenfed, as I Ihall
endeavour to Ihow by and by. Difgrace has the
contrary efFeft. The trade of a butcher is a
brutal and ail odious bufinefs ; but it is in moll:
places more profitable than the greater part of
common trades. The rtioft detcftable of all em-
ployments, that of public executioner, is, in pro-
portion to the quantity of work done, better
paid than any common trade whatever.

Hunting and fiihing, the moft important
employments of mankind in the rude ftate of
fociety, become in its advanced ftate their moft
agreeable amufements, and they purfue for plca-
fure what they once followed from ncceflity. In
the advanced ftate of fociety, therefore, they are
all very poor people who follow as a trade, what
other people purfue as a paftimfe. . Fiihermen
have been fo fince the time of * Theocritus. A
poacher is every-wherc a very poor man in Great
Britain. In countries where the rigour of the
law fufFers no poachers, the licenfcd hunter is not
in a much better condition. The natural tafte
for thofe employments makes moi-e people fol-
low them than can five comfortably by them,
and the produce of their labour, in proportion

* Side Idyilium xxi.

154 THE NATURE AND CAUSES OF

P o o K to its quantity, comes always too cheap to mar-
Jcet to afford any thing but the moft fcanty fub-
fiftence to the labourers.

DiSAGREEABLEN£Ss and di(grace a0e6t the
profits of ftock in the fame manner as the wages
pf labour. The Keeper of an inn or tavern, who
is never mafter of l\h ovA hoijfe, and who is ex-
pofed to the brutality of every drunkard, ex-
ercifes i^ei^her a very agreeable nor a very cre-
ditable bufinefe. But there is fcarce any com-
mon ?rade in which <^ fmaU ftpck yields, fo great '
dt profit.

Secondlvji The wages of labour vary with the
eafinefs ^n4 cheapnefs, or the difficulty and ex-
pence of learning the bufineis.

When any expenfive machine is erefled, th?
extraordinary work to be performed by it before
It is worn out, it muft be expedted*, will replace
the capital laid out upon it^ with at leaft the or-
dinary profits. A man edyc^t^ at ^he expence
of much labour and time tQ any of thofe em-
ployments which require . extra^Qr^inary dexterity
and (kill, may be conipvcd to onr pf thoft ex-:
penfive machines. Tjie work which hq learn$
to perform, it muft be expeded^ ov?r an4 abov?
the ufual wages of common labour, will replace
to him the whole expence of his education, with
at leaft the ordinary profits of an equally valuable
capital. It nr^u^ft do this too in a reafonable time,
regard being had to the very uncertain duration
of human life, in the fame manner as to the
more certain duration of the machine.

The

THE WEALTH OF NATIONS. 155

»The difference between the wages of Ikilled ^ \^^"
labour and thofe of common labour^ is founded
upon this principle.

The policy of Europe confiders the labour of
all mechanics^ artificers, and manufadurerSj as
ikilled labour ; and that of all country labourers
as common labour. It feems to fuppofe that of
the former to be of a more nice and delicate
• nature than that of the latter. It is fo perhaps
in Ibme cafes ; but in the greater part it is quite
otherwife, as I fhall endeavour to fliew by and
by. The laws and cuftoms of Europe, there-
fore, in order to qualify any perfon for e^ercif-
ing the one fpecies of labour, impofe the necef-
fity of an apprenticelhip, though with differ-
ent degrees of rigour in different places. They
leave the other free and open to every body.
During the Continuance of the apprenticelhip,
the whole labour of the apprentice belongs to
,his mailer. In the mean time he muft, in many
cafes, be maintained by his parents or relations,
and in almoft all cafes muil be cloathed by
them* Some money too is commonly given to
the mailer for teaching him his trade. They who
cannot give money, give time, or become bound
for more than the ufual number of years ; a con-
fideration which, though it is not always advan-
tageous to the mailer, on account of the ufual
idlenefs of apprentices, is always difadvantageous
to the apprentice. In country labour, on the
contrary, the labourer, while he is employed
about the eafier, learns the more difficult parts of
bis bufmefs^ and his own labour maintains him

through

is6 THE NATURE AND CAUSES OF

» o^ o K through a|] the different ftages of his employ-
ment* It is reafonable, therefore^ diat in Eu^
rope the wages of mechanics, artificers, and
manufadurers, ihould be fomewhat higher than
thofe of common labourers. They are fo ac-
cordingly, and their fuperior gains make them
in nK)ft places be confidered as a fuperior rank
of people. This fuperiority, however, is gene-
rally very fmall ; the daily or weekly -earnings of
journeymen in the ntiore common forts of mainu*
fadures, fuch as thofe of plain linen and woollen
cloth,' computed at an average, are, in moft
places, very little more than the day wage» of
common labourers. Their employn^ent, indeed^
is more ileady and uniform, and the fuperiority
of their earnings, taking the whole year toge-*
ther, may be fomewhat greater. It feems evi^
dently, however, to be no greater than what is
fufEcient to coiT>penfate ^e fuperior expence of
their education.

EbccATioN in the ingenioiB arts and in the
Kberal profcflions, is ftill more tedious and ex-
penfive. The pecuniary recompence, thercfttfc,
of painters and fculptors, of lawyers and phyfi-
cians, ought to be ipuch more liberal : ar^ it is
io accordingly.

The profits of ftock feem to be very Eccle zf-
fe6l6d by the eafinefs or "difficulty of learning the
trade in which it is employed. AH the different
ways in which ftock is commonly employed m
great towns feem, in reality, to be almoft eqtmHy
t^y and equally difficult to learn. One branch

either

THE WEALTH OF NATIONS. 157

either of foreign or domeftic trade, cannot well ^ ^^^ ^*
be a much more intricate bufinefs than another.

Thirdly, The wages of labour in different
occupations vary with the conftancy or inconftancy
of employment.

Employment is much more conftant ih fome
trades than in others. In the greater .part of ma-
nufaftures, a journeyman may be pretty fure of
employment sdmioft every day in the year that he
is able to work. A mafon or bricklayer, on
the contrary, can work neither in hard froft nor
in foul weather, and his employment at all other
times depends upon the occafional c^Us of his
cuftomers. He is liable, in confequence, to be
frequently without any. What he earnsf there-
fore, while he is employed, muft not only main-
tain him while he is idle, but make him fom$
compenfation for thofe anxious and dc^onding
moments which the thought of fo precarious a
fituation muft fometimes occafion. Where the
computed earnings of the greater part of manu-
facturers, accordingly, arc nearly upon a level
with the day wages of comn^on labourers, thofe
of mafons and bricklayers are generally from
one half more to double thofe wages. Where
common labourers earn four and five fhillings a
wctky mafons and bricklayers frequently earn
feven and eight ; where the former earn fix, the
latter often earn niae and ten, and where the
former earn mne and ten, as in London, the lat-
ter commonly earn fifteen and eighteen. No
fpecies of ikilled labour, however^ feems more
eafy to learn than that of mafons and bricklayers.

Chairmen

I5« TH& NATURE AND CAUSES OF

B o^o K Chairmen in London, during the fummcr ieafort,
are faid fbmetimes to be employed as brick-
layers. The high wages of thofe workmen,
therefore, arc not fo much the recompence of
their ikill, as the compenfation for the incon-
ftancy of their employment*

A HOUSE carpenter feems to exercife rather a
nicer and more ingenious trade than a maibn.
In moft places, however, for it is not univcrfally
fOi his day-wages are (bmewhat lower. His em-
ployment, though it depends much, does not
depend fo entirely upon the occafional calls of his
cuftomers ; and it is not liable to be interrupted
by the weather.

WntN the trades which generally aflfbrd con-
ftant employment, happen in a particular place
not to do (b, the wages of the workmen always
rife a good deal above their ordinary proportion
to thofe of common labour. In London almoft
all journeymen artificers are liable to be called
upon and difmiffed by their mailers from day to
day) and from week to week, in the fame man-
ner as day-labourers in other places. The loweft
order of artificers, journeymen taylors, accord-
ingly, earn there half a crown a day, though
eighteen pence may be reckoned the wages of
common labour. In fmall towns and country
villages, the wages of journeymen taylors fre-
quently fcarce equal thofe of common labour;
but in London they are often many weeks with-
out employment, particularly during the fum-
mer.

When

' THE WEALTfl OF NATIONS. i>*9

I, When the inconftancy of employment is com- ^ ^^^ ^•

- ^ bined with the hardfliip, difagreeablenefs, and
, dirtinefs of the work, it fometimes raifes the

( Wages of the moft common labour above thofe

of the moft fkilful artificers. A collier working
by the piece is fuppofed, at Newcaftle, to earn
commonly about double, and in many parts of
Scodand about three times the wages of com-
mon labour. His high wages arife altogether
from the hardfhip, difagreeablenefs, and dirti-
nefs of his work. His employment may, upon
^ moft occafions> be as conftant as he pleafes.
; The coal-heavers in London exercife a trade

which in hardlhip, dirtinefs, and difagreeablenefs,
almoft equals that of colliers; and from the
r unavoidable irregularity in the arrivals of coal-

fhips, the employment of the greatef- part of
them is neceflarily very inconftant. If colliers^
^ therefore, commonly earn double and triple the

wages of common labour, it ought not to feeni
UBreafonable that coal-heavers (hould fometimes
earn four and five times thofe wages. In the
enquiry made into their condition a few years
ago, it was found that at the rate at which they
were then paid, they could earn from fix to ten
fhillings a day. Six ihillings are about^ four
times the wages of concunon labour in London,
and in every particular trade, the loweft cbm-
( mon earnings may always be confidered as thofe

of the far greater number, . How extravagant
foever thofe earnings may appear, if they were
more than fufKcient to compenfate all the dif-
agreeable circumftances of the bufmefs, there

would

t6o ttlE NATURE AND CAUSES OP

B o^o K. would ibon be fo great a number of competitor^
as^ in a trade which has no exclufive privilege^
would quickly reduce them to a loweiyrate.

The conftancy or inconftancy of employment
cannot eflfeft the ordinary profits of ftock ia any'
particular trade. Whether the ftock is or ia not
conftantly employed dependsj not upon the trade,
but the trader.

Fou^RTHLY, The wages of labour Vary accord-
ing to the fmall or great truft which muft be re-
poled in the workmen.

The wages of goldfmiths and jewellers are
cvery-where fuperior to thofe of many other
workmen, not only of equal, but of much fupe-
rior ingenuity ; on account of the precious ma-
terials with which they are iritrufted.

We truft our health to the phyfician ; our for-
tune and fometimes our life and reputation to the
lawyer and attorney. Such confidence could not
fafely be repofed in people of a very mean or
low condition. Their reward muft be fuch,
therefore, as may give them that rank in the fo-
ciety which fo important a truft requires. The
long time and the great expencc which muft be
laid out in their education, when combined with
this circumftance, neceffarily enhance ftill fur-
ther the price of their labour.

When a perfon employs only his own ftock in
trade, there is no truft ; and the credit which he
may get from other people, depends, not upon
the nature of his trade, but upon their opinion
of his fortune^ probity, and prudence. The dif-
ferent

--H

*rHE WEALTH Ol^. NATIONS. 161

fcrent rates of profit, therefore, in the different c h^a p,
branches of trade^ cannot arife from the different
degrees of truft repofed in the traders.

Fifthly, The wages of labour iii different
employments vary according to the probability or
improbability of fuccefs in them*

The probability that any particular perfon (hall
ever be qualified for the employment to which
he is educated, is very different in different occu-
pations. In the greater part of mechanic trades^
fuccefs is almoft certain ; but very uncertain in
the liberal profeffions. Put your fon apprentice
to a ihoemaker, there is little doubt of his learn-
ing to rhake a pair of fhoes : But fend him to
ftudy the law, it is at leaft twenty to one if ever
he makes fuch proficiency as will enable him to
live by the bufinefs. In a perfeftly fair lottery,
thofe who draw the prizes ought to gain all that
is loft by thofe who draw the blanks. In a pro-
feffion where twenty fail for one that (licceeds,
that one ought to gain all that fhould have been
gained by the unfuccefsful twenty. The coun-
fcllor at law who, perhaps, at near forty years
of age, begins to make fomethiog by his pro-
feffion, ought to receive the retribution, not
only of his own fo tedious and expenfive edu-
cation, but of that of more than twenty others
who are never likely to make any thing by
it. .How extravagant foever the fees of coun-
feUors at law may fometimes appear, their real
retribution is never equal to this. Compute
in any particular place, what is likely to be
annually gained, and what is likely to be an-

VoL-I. M nually

1 62 THE NATURE XnD CAUSES OP

B o^o K nually (pent, by all the different worlcnmen in any
conimon trade, fuch as that of ihoenmakcrs or
weavers, and you will find that the former fum
will generally exceed the latter. But make the
fame computation with regard to all the counfel-
lors and ftudents of law, in all the different inns
of court, and you will find that their annual gains
bear but a very fmall proportion to their an-
nual expence, even though you rate the former
as high, and the latter as low, as can well be
done. The lottery of the law, therefore, is very
far from being a , perfedlly fair lottery \ and that,
as well as many other liberal and honourable pro-
feffions, is, in point of pecuniary gain, evi-
dently under-recompenced.

Those profeffions keep their level, however,
with other occupations, and, notwithftanding
thefe difcouragements, all the moft generous and
liberal fpirits are eager to crowd into them.
Two different caufes contribute to recommend
them. Firft, the defire of the reputation which
attends upon fuperior excellence in any of them 5
and, fecondly, the natural confidence which every
man has more or lefs, not only in his own abili-
ties, but in his own good fortune.

To excel in any profeffion, in which but few
arrive at mediocrity, is the moft decifive mark of
what is called genius or fuperior talents* The
public admiration which attends upon fuch dif-
tinguifhed abilities, makes always a part of their
reward ; a greater or fmaller in proportion as it
is higher or lower in degree. It makes a con-
fiderable part of that reward in the profeffion of

phyfic 5

^E WEALtH OF NATIONS. i6j

phyfic ; a ftill greater perhaps in that of law ; ^ ^ ^ p-
in poetry and philofophy it makes ahnoft the
whole.

There are fome very agreeable and beautiful
talents of which the poffeflion commands a cer-
tain fort of admiration ; but of which the exer-
cife for the fake of gain is confidered, whether
from reafon or prejudice, as a fort of public pro-
ftitution. The pecuniary recompence, there-
fore, of thofe who exercife them in this manner,
muft be fufficient, not* only to pay for the time,
labour, and expence of acquiring the talents,
but for the difcredit which attends the employ-
ment of them as the means of fubfiftence. The
exorbitant rewards of players, opera- fingers,
opera-dancers, &c. are founded upon thofe two
principles ; the rarity and beauty of the talents,
and the difcredit of employing them in this
manner. It feems abfurd at firft fight that we
fliould defpife their perfons, and yet reward their
talents with the moft profufe liberality. While
we do the one, however, we muft of necefllty do
the other. Should the public opinion or pre-
judice ever alter with regard to fuch occupa-
tions, their pecuniary recompence would quickly
diminifh. More people would apply to them,
and the competition would quickly reduce the
price of their labour. Such talents, though far
fi-om being common, are by no means fo rare as
is imagined. Many people poffefs them in great
perfection, who difdain to make this ufe of
them } and many more are capable of acquiring

M 2 them.

i6+ THE NATURE AND CAUSES OF

BOOK them, if any thing could be made honourably
by them.

The over-weening conceit which the greater
part of men have of their own abilities, is an
ancient evil remarked by the philofbphers and
moralifts of all ages. Their abfurd prefumption
in their own good fortune, has been lefs taken
notice of. It is, however, if poflible, ftill more
univerfal. There is no man living who, when
in tolerable health and ipirits, has not ibme fhare
of it. The chance of gain is by every man
more or lefs over- valued, and the chance of lofs
is. by mofl men under- valued, and by fcarce any
man, who is in tolerable health and ipirits, va-
lued more than it is worth.

That the chance of gain is naturally over-
valued, we may learn from the univerfal fuccefs
of lotteries. The world neither ever faw, nor
ever will fee, a perfedly fair lottery; or one in
which the whole gain compenfated the whole lofs ;
becaufe the undertaker could make nothing by
it. In the ftate lotteries the tickets are really
not worth the price which is paid by the original
fubfcribers, and yet commonly fell in the market
for twenty, thirty, and fometimes forty per cent,
advance. The vain hope of gaining fome of the
great prizes is the Iblc caufe of this demand.
The fobereft people fcarce look upon it as a folly
to pay a fmall •fum for the chance of gaining ten
or twenty thoufand pounds; though they know
that even that fmall fum is perhaps twenty
or thirty per cent, more than the chance i^
worth. In a lottery in which no prize exceeded

twenty

THE WEALTH OF NATIONS. i&s

twenty pounds, though in other refpefts it ap- ^ ha p.
proached much nearer to a perfeftly fair one
than the common ftate lotteries, there would not
be the fame demand for tickets. In order to
have a better chance for fome of the great prizes,
fome people purchafe fcveral tickets, and others,
fmall ftiares in a ftill greater number. There is
not, however, a more certain propofition in ma-
thematics, than that the more tickets you ad-
venture upon, the more likely you are to be a
lofer. Adventure upon all the tickets in the
lottery, and you lofe for certain ; and the greater
the number of your tickets the nearer you ap-
proach to this certainty.

That the chance of lofs is frequently under-
valued, and fcarce ever valued more than it is
worth, we may learn from the very moderate
profit of iniurers. « In order to make infurance,
cither from fire or fea-rilk, a trade at all, the
common premium muft be fufficient to compen-
fate the common lofles, to pay the expence of
management, and to afford fuch a profit as
might have been drawn from an equal capital
employed in any common trade. The perfon
who pays no more than this, evidently pays no
more than the real value of the rifk, or the loweft
price at which he can rcafonably expeft to
infure it. But though many people have made
a little money by infurance, very few have made
a great fortune; and from this confideration
alone, it feems evident enough, that the ordinary
balance of profit and lofs is not more advanta-
geous in this, than in other cohimon trades by

M 3 which

166 THE NATURE AND CAUSES OF

B o^ o K which fo many people make fortunes. Moderate,
however, as the premium of infurance commonly
is, nriany people defpife the rifle too much to
care to pay it. Taking the whole kingdom at
an average, nineteen houfes in twenty, or rather,
perhaps, ninety-nine in a hundred, are not in-
fured from fire. Sea rifle is more alarming tq
the greater part of people, and the proportion
of fliips infured to thofe not infured is much
greater. Many fail, however, at all feafons, and
even in time of war, without any infurance.
This may fometimes perhaps be dohe without any
imprudence. When a great company, or even a
great merchant, has twenty or thirty fliips at .fea,j
they may, as it were, infure one another. The
premium faved upon them aU, may more than
compenfate fuch loflTes as they are likely to meet
with in the common courfe of chances. The
negledt of infurance upon fliipping, however, in
the fame manner as upon houfes, is, in mofl:
cafes, the efFeft of no fuch nice calculation, but
of mere thoughtlefs raftinefs and prefumptuous
contempt of the rifle.

The contempt of rifle and the prefumptuous
hope of fuccefs, are in no period of life more
aftive than at the age at which young people
chufe their profeflions. How little the fear of
misfortune is then capable of balancing the hope
of good luck, appears fl:ill more evidently in the
readinefs of the common people . to enlift as
foldiers, or to go to fea, than in the eagernefs of
thofe of better fafliion to enter into what are
called the liberal profeflions.

WnAip

THE WEALTH OF NATIONS- 167

What a common foldier may lofe is obvious ^ ^^ p-
enough. Without regarding the danger, how-
ever, young volunteers never enlift fo readily as
at the beginning of a Rew war ; and though they
have fcarce any chance of preferment, they figure
to themfelves, in their youthful fancies, a thou-
fand occafions of acquiring honour and diftinc-
tion which never occur. Thefe romantic hopes
make the whole price of their blood. Their pay
is Icfe than that of common labourers, and in
aftual fervice their fatigues are much greater.

The lottery of the fea is not altogether fb dif-
advantageous as that of the army. The fon of
a creditable labourer or artificer may frequently
go to fea with his father's confent; but if he
cnlifts as a foldier, it is always without it. Other
people fee fome chance of his making fomething
by the one trade : nobody but himfelf fees any of
his making any thing by the other. The great
admiral is lefs the objied: of public admiration
than the great general, and the higheft fucceft
in the fea fervice promifes a lefs brilliant for-
,tune and reputation than equal fuccefs in the
land. The fame difference runs through all the
inferior degrees of preferment in both. By the
rules of precedency a captain in the navy ranks
with a colonel in the army : but he does not rank
with him in the common eflimation. As the
great prizes in the lottery are lefs, the fmaller
ones mufl be more numerous. Common failors,
therefore, more frequently get fome fortune and
preferment than common foldiers ; and the hope
of thofc prizes is what principally recommends

M 4 the

i$8 THE NATURB AND CAUSES OP

® ^j^ '^ the trade. Though their flcill and dexterity are
much fuperior to that of almoft any artificersj
and though' their whole life is one continual
fcene of hardfhip and danger^ yet for all this
dexterity and flcill, for all thofe hardfhips and
dangers, while they remain in the condition of
common failors, they receive fcarce any other
rccompence but the pleafure of exercifing the
one and of furmounting the other. Their wages
are not greater than thofe of common labourers
at the port which regulates the rate of fcamen's
wages. As they are continually going from port
to port, . the monthly pay of thofe who fail from
all the different ports of Great Britain, is more
nearly upon a level than that of any other
workmen in thofe different places ; and the rate
of the port to and from which the greateft num«-
ber fail, that is the port of London, regulates
that of all the reft. At London the wages of
the greater part of the different clafies of work-
men are about double thofe of the fame claffes a(
Edinburgh. But the failors who fail fi-om the
port of London feldom earn above three or four
(hillings a month more than thofe who fail from
the port of Leith, and the difference is fre-
quently not fo great. In time of peace, and in
the merchant ferviqe, the London price is from
a guinea to about feven-and-twenty fhillings the
calendar month. A common labourer in I^on-
don, at the rate of nine or ten fhillings a week;
may earn in the calendar month from forty to
five-and-forty fhillings. The faiior, indeed,
over and above his pay, is fupplied with provi-

5 fions«

THE WEALTH OF NATIONS. 169

fions. Their value, however, may not perhaps^ "^^ ^*
always exceed the difference between his pay and
that of the common labourer; and though it
fometimes fhould, the excefs will not be clear gain
to the failor, becaufe he cannot fhare it with his
wife and family, whom he muft maintain out of
his wages at home.

The dangers and hair-breadth efcapes of a life
of adventures, inftead of difheartening young
people, fcem frequendy to recommend a trade
to them. A tender mother, among the inferior
ranks of people, is often afraid to fend her fon to
fchool at a fea-port town, left the fi^t of the
ihips and the converfation and adventures of the
failors fhould entice him to go to fea. The dif-
tant profpe& of hazards, from which we can hope
to extricate ourfelves'by courage and addrefs, is
not difagreeable to us, and does not raife the
wages of labour in any employment. It is other-
wife with thofe in which courage and addrefs can
be of no avail. In trades which are known to be
very unwholeforae, the wages of labour are always
remarkably high. Unwholefomenefs is a fpecies
of difagreeablenefs, and its efFeds upon the wages
of labour are to be ranked under that general
head..

In all the different employments of ftock, the
ordinary rate of profit varies more or lefs with
the certainty or uncertainty of the returns. Thefe
are in general lefs uncertain in the inland than in
the foreign trade, and in fbme branches of fo-
reign trade than in others ; in the trade to North
America, for example, than in that to Jamaica*

The

I70 THE NATURE AND CAUSES OF

B o^o K The ordinary rate of profit always rifes more or
lefs with the rifk. It does not, however, feem to
rife in proportion to it, or ib as to compenfate it
completely. Bankruptcies arc moft frequent in
the moft hazardous trades. The moft hazardous
of all trades, that of a fmuggler, though when
the adventure fucceeds it is likewife the moft
profitable, is the infallible road to bankruptcy*
The prefumptuous hope of fuccefs. feems to aft
here as upon all other occafions, and to entice fo
many adventurers into thofe hazardous trades,
that their competition reduces their profit below
what is fufficient to compenfate the rilk. To
compenfate it completely, the common returns
ought, over and above the ordinary profits of
ftock, not only to make up for all occafional lofies,
but to afford a furplus profit to the adventurers
of the fame nature with the profit of infurcrs.
But if the common returns were fufficient for all
this, bankruptcies would not be more frequent in
thefe than in other trades.

Of the five circumftances, therefore, which
vary the wages of labour, two only^ aflFgSt the
profits of ftock ; the agreeablenefs or difagree-
ablenefs of the bufinefs, and the rifk or fecurity
with which it is attended. In point of agree*
ablenefs or difagreeablenefs, there is little or no
difference in the far greater part of the different
employments of ftock ; but a great deal in thofe
of labour; and the ordinary profit of ftock,
though it rifes with the rifk, does not always
feem to rife in proportion to it. It fhould fol*
low from all this, that, in the fame fociety pr

neigh-

THE WEALTH OF NATIONS.. 171

neighbourhood, the average and ordinary rates ^ \^^"
of profit in the different employments of ftock
fhould, be more nearly upon a level than the
pecuniary wages of the different forts of laboun
They are fo accordingly. The difference be-
tween the earnings of a common labourer and
thofe of a well employed lawyer or phyfician, is
evidently much greater than that between the
ordinary profits in any two different branches of
trade. The apparent difference, befidcs, in the
profits of different trades, is generally a deception
arifing froip pur not always diftinguifhing what
ought to be confid^red ^§ wages, from what ought
to be confidered as profit.

Apothecaries profit is become a bye-word,
denoting fomething uncommonly extravagant*
This great apparent profit, however, is fre-
quently no more than the reafonable wages of
labour. The fkill of an apothecary is a much
nicer and more delicate matter than that of any
artificer whatever 3 and the trufl which is repofed
in him is of much greater importance. He is
the phyfician of the poor in all cafes, and of the
rich when the diflrefs or danger is not very great.
His reward, therefore, ought to be fuitable to
his Ikill and his trufl, and it arifes generally
from the price at which he fells his drugs. But
the whole drugs which the bed employed apo-
thecary, in a large market town, will fell in a
year, may not perhaps cofl him above thirty or
forty pounds. Though he fhould fell them,
therefore, for three or four hundred, or at a
l;houfand per cent, profit, this may frequently be

172 THE NATURE AND CAUSES OF

B o o K i^Q more than the rcafonable wages of his labour
charged, in the only way in which he can charge
them, upon the price of his drugs. The greater
part of the apparent profit is real wages difguifed
in the garb of profit.

In a fmall fea-port town, a little grocer will
make forty or fifty per cent, upon a ftock of a
fingle hundred pounds, while a confiderable
wholefale nierchant in the fame place will fcarce
make eight or ten per cent, upon a ftock of ten
thoufand. The trade of the grocer may be ne-
ccffary for the conveniency of the inhabitants,
and the narrownefs of the market may not admit
the employment of a larger capital in the bufi-
nefs. The man, however, muft not only live
by his trade, but live by it fuitably to the quali-
fications which it requires. Befides poflfeffing a
litde capital, he muft be able to read, write, and
account, and muft be a tolerable judge too ofi
perhaps, fifty or fixty different forts of goods,
their prices, qualities, and the markets where
they are to be had cheapeft:. He muft have all
the knowledge, in fhort, that is neceSkwf for a
great merchant, which nothing hinders him from
becoming but the want of a fufficient capital.
Thirty or forty pounds a year cannot be con-
fidered as too great a recompence for the labour
of a pcrfon fo accompliftied. Deduft this from
the feemingly great profits of his capital, ancT little
more will remain, perhaps, than the ordinary
profits of ftock. The greater part of the ap-
parent profit is, in this cafe too^ real wages.

The

THE WEALTH OF NATIONS. 175

The difference between the apparent profit of ^ " ^ ^•
the retail and that of the wholefale trade, is much
lefs in the capital than in foiall towns and coun-
try villages. Where ten thoufand pounds can
be employed in the grocery trade, the wages of
the grocer's labour make but a very trifling addi-
tion to the real profits of fo great a ftock. The
apparent profits of the wealthy retailer, there-
fore, are there more nearly upon a level with
thofe of the wholefale merchant. It is upon this
account that goods fold by retail are generally
as cheap and frequently much cheaper in the
capital than in fmall towns and country vilifies.
Grocery goods, for example, are generally much
cheaper; bread •nd butcher's meat frequently
as cheap. It cofts no more to bring grocery
goods to the great town than to the country
village; but it cofts a great deal rhore to bring
corn and cattle, as the greater part of them
muft be brought from a much greater diftance.
The prime coft of grocery goods, therefore, be-
ing the fame in both places, they are cheapeft
where .the leaft profit is cl^^rged upon them.
The prime coft of breid and butcher's meat is
greater in the great town than in the country
village; and though the profit is lefs, therefore
they are not always cheaper there, but often
equally cheap. In fuch articles as bread and
butcher's meat, the fame caufe, which dimi-
niihes apparent profit, increafes prime coft. The
extent of the market, by giving employment to
greater ftocks, diminilhes apparent profit; but
by requiring fupplies from a greater diftance, it

increafes

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•THE WEALTH OF NATIONS. . i^S

times made in fuch places by what is called tfid
trade of fpeculation. ' The fpcculative merchant
exercifes no one regular, eftabliflied, or well-
known branch of bufmefs. He is a corn merchant
this year, and a wine merchant the next, and a
fugar, tobacco, or tea merchant the year after.
He enters into every trade when he forefees that
it is likely to be more than commonly profitable,
and he quits it .when he forefees that its profits
are likely to return to the level of other trades.
His profits and lofles, therefore, can bear no re-
gular proportion to thofe of any one eftablilhed
and well-known branch of bufinefs. A bold ad-
venturer may fometimes acquire a confiderable
fortune by two or three fuccefsful ipeculations ;
but is juft as likely to lofe one by two or three
unfuccefsful ones. This trade can be carried on
no where but in great towns. It is only in
places of the moft extenfive commerce and cor-
refpondence that the intelligence requifitc for it
can be had.

The five circumftances above mentioned,
though they occafion confiderable inequalities in
the wages of labour and profits of ftock, occafion
none in the whole of the advantages and difad-
vantages, real or imaginary, of the different em-
ployments of either. The nature of thofe cir-
cumftances is fuch, that they make up for a fmall
pecuniary gain in fome, aod counter-balance a
great one in others.

In order, however, that this equality may
take place in the whole of their advantages or
diiadvantages, three things are requifite even

where

176 ^ THE NATURE AND CAUSES OP

B o ^o K where there is the moft perfeft freedom. Firft,
the employments mud be well known and long
eftablifhed in the neighbourhood] iecondly^ they
muft be in their ordinary, or what nwy be called
their natural ftate; and, thirdly, they muft be the
fole or principal employments of thofe who oc-^
cupy them.

First, this equality can take place only in
thofe employments which are w;ll known, and
have been long eftablilhed in the nei^bour-
hood.

Where all other circumftances are equals
wages are generally higher in new than in old
trades. When a projector attempts to eftabliih
a new manufacture, he muft at firft entice his
workmen from other employments by higher
wages than they can either earn in their own
trades, or than the nature of his work would
otherwife require, and a confiderable time muft
pafs away before he can venture to reduce them
to the common level. Manufaftures for which
the demand arifes altogether from fafhion and
fancy, are continually changing, and feldom laft
long enough to be confidered as old eftablifhed
manufaftures. Thofe, on the contrary, for
which the demand arifes chiefly from ufe or ne-
ceffity, are lefs liable to change, and the fame
form or * fabric may continue in demand for
whole centuries together. The wages of labour,
therefore, are likely to be higher in manufactures
of the former, than in thofe of tlie latter kind,
Birmingham deals chiefly in manufactures of the
former kindi Sheffield in thofe of the latter;:

and

^ I

THE WEALTH OF NATIONS. 177

And the wagc^ of labour in thofe two different ^ " ^ p-
places^ are faid to be fuitable to this difference in
the nature of their manufaftures.

The eftablifhirjent of any new manufafture,
of any new branch of commerce, or of any new
praftiee in agriculture, is always a Ipcculation,
from which the projector promifes himfelf extra-
ordinary profits. Thefe profits fometimes are
very great, and fometimes, more frequently,
perhaps, they are quite otherwife ; but in general
they bear no regular proportion to thofe of other
cJd trades in the neighbourhood. If the projedt
fucceeds, they are commonly at firft very high.
When the trade or praftice becomes thorbughly
eftabliftied and well known, the competition re-
duces them to the level of other trades.

Secondly, This equality in the whole of the
advantages and difadvantages. of the different em-
ployments of labour and ftock, can take place
only in the ordinary, or what may be called the
natural Hate of thofe employments.

The demand for almoft every different fpecies
of labour is fometimes greater and fometimes
left than ufual. In the one cafe the advantages
of the employment rife above, in the other they
fall below the common level. The demand for
country labour is greater at hay-time and harvefl,
than during the greater part of the year; and
wages rife with the demand. In time of war,
when forty or fifty thoufand failors are forced
from the merchant fervice into that of the king,
the demani for failors to merchant fhips necef-
farily riles with their fcarcity, and their wages

Vou I. N upon

ijf; THE NATURE AND* CAUSES OF

6 O O K

upon fuch occafions commonly rife froBi a gninetf
and feven-and-twenty (hillings, to forty fliillingsi
and three pounds a month. In a decaying mar-
nufafture, on the contrary, many workmen, ra-
ther than quit their oid trade, are contented wirfi
fmaller wages than would otherwifc be fuitable ta
the nature of their employment.

The profits of ftock vary with the price of
the commodities in which it is employed As
the price of any commodity rifcs above the ordi-
nary or average rate, the profits of at leaft' i6mc
part of the ftock that is employed in brining it
to market, rife above their proper level, and as
it falls they fink below it. All comniodities are
more or lefs liable to variations of price, but
fome arc much more fo than others. In att
commodities which are produced by human in-
duftry, the quantity of induftry annually era-^
ployed is neceffarily regulated by the annual de^
mand> in fuch a manner that the average annual
produce may, as nearly as poflible, be equal t<^
the average annual confumption.. In fome em-^
ployments> it has already been obferved, th0
fame q.uantity of induftry will always produce
the fame, or very nearly the fame quantity of
commodities. In the linen or woollen manu-
faftures, for example, the fame number of Iiands
will annually, work up very nearly the fame
quantity of linen and woollen cloth. The variat-
tions in the market price of fuch comniodities,
therefore, can arife only from fome accidental
variation in the demand. A public mournirg.
raifes the price of black cloth. But as the demand
8 for

THE WEALTH OF NATIONS. 17^

for moft forts of |dain lineii and woollen cloth is ^ ^^ ^*
pretty uniform, fo is likewife the price. But
there are other employments in which the fame
quantity of induftry will not always produce
the fame quantity of commodities. The fame
quantity of induftry, for example, will, in dif-
ferent years, produce very different quantities of
corn, wine, hops, fugar, tobacco, &c. The price
of fuch commodities, therefore, varies not only
with the variations of demand, but with the much
greater and more frequent variations of quantity,
and is confequently extremely fluftuating. But
the profit 'of fome of the dealers muft necefTarily
fluftuate with the price of the commodities. The
operations of the fpeculative merchant are prin-
cipally employed about fuch commodities. He
endeavours to buy them up when he fbrefees that
their price is likely to rife^ and to fell them when
it is likely to fall.

Thirdly, This equality in the whole of the ad*
vantages and difad vantages of the different em*
ployments of labour and ftock, can take place
only in fuch as are the fole or principal employ-
ments of thofe who occupy them.

When a perfon derives his lubfiftence from
one employment, which does not occupy the
greater part of his time ; in the intervals of his
leifure he is often willing to work at another for
lefs wages than would otherwife fuit the nature of
the employment.

There ftill fubfifts in many parts of Scotland
a fet of people called Cotters or Cottagers^
though they were more fiequent fome years ago

N 2. thatt

i8o THE NATURE AI^D CAtJSES OF

B 0^0 K than they arc now. They arc a fort of ouf^
fcrvants of the landlords, and farmers. The
ufual reward which they Teceivc from their
mafters is a houfe, a fmall garden for pot herbs,
as much griafs as will ktd a cow, and, perhaps*,
an acre or two of bad arable land. When their
rnafter has occafion for their labour, he gives
them, befidcs, two pecks of oatmed a week^
worth abom fixteen pence fterling. During a
great p^rt of the year he has little or no occafion
for their labour^ and the cultivation of their own
little poffeflion is not fufficicnt to occupy the
time which is left at their 6wn difpofal. When
fuch occupiers were more numerous than they
are at prefent, they are faid to have been willing
to give their fpare time for a very fmall recom-
pence to any hodty, and to have wrought for left
^ages than other labourers. In ancient times
they feem to have been common all over Eu-^.
rope. In countries ill cultivated and worfe in-
habited, the greater part of landlords and farm-
ers could not otherwife provide themfelves with
the extraordinary number of hands, which cotin-
try labour requires at certain feafons^ The daily
6r weekly recompencc which fuch labourers oc-
cafionally received from their mafters, was evi-
dently not the whole price of theic labour. Their
fmall tenement rhade a confiderable part of it. . This
daily or weekly recompencc, however, fcems to
have been confidered as the whole of it, by many
writers who have coUefted the prices ©f labour and
provifions in ancient tinmes^ and who havef takea
.j[)leafure in reprefenting both as wonderfully low.

<, The

THE WEALTH OF NATIONS.

x8i

The produce of fuch labour comes frequently ^ ^^ p-
cheaper to market than would otherwife be fuit-
able to its nature. Stockings in many parts of
Scotland are knit much cheaper than they can
any-where be wrought upon the loom. They are
the work of fcrvants and labourers, who derive
the principal part of their fubfiftence from fome
Other employment. More than a thoufand pair
of Shetland ftockings are annually imported into
Leith, of which the price is from five pence to
ieven pence a pair. At Learwick, the fmall ca-
pital of the Shetland iflands, ten pence a day, I
have been affured, is a common ^price of com-
mon labour. In the fame iflands they knit
worfted ftockings to the value of a guinea a pait
^nd upwards.

The Ipinning of linpn yarn is carried on in
Scotland nearly in the fame way as the knitting
of ftockings, by fervants who are chiefly hired
for other purpofes. They earn but a very fpanty
fubfiftence, who endeavour to get their whole
livelihood by either of thofe trades. In moft parts
of Scotland flie is a good Ipinner who can earn
twenty pence a week.

In opulent countries the market is generally
fo exterifive, that any one trade is fufiicient to
employ the whole labpy r and ftock of thofe whq
occupy it. Inftances of people's living by one
employment, and at thf fame time deriving fome
little advantage from another, occur chiefly in
poor countries. The following inftance, how-,
ever, of foniething of the fame kind is to be
found in the capital of a very riqJU one. There

N 3 i^

184 THE NATURE AJID CAUSES OF

B o 0 R 15 i^Q city in Europe, I believe, in which hoofe-
rent is dearer than in London, and yet I know
no capital in which a furnilhed apartment can be
hired fo cheap. Lodging is not onljr n^uch
cheaper in Lbndon than in Paris; it is much
cheaper than in Edinburgh of ihe fame degree
of goodnefsj and what may feem extraordinary^
the^ <Jearnefs of houfe-rent is the caufe of the
cheajpnefs of lodging. The dearnefs of houfe-
rent in London arifes, not only from thofe caufes
which render it dear in all great capitals, the
dearnefs of labour, the dearnefs of all the ma-?
-terials of building, which m'uft generally be
brought from a great diftance, and above all the
dearnefs of ground-rent, every landlord afting
the part of a monopolift, and frequently exaftingj
s^ higher rent for a fingle acre of bad land in
8 town, than can be had for a hundred of the
bed in the country; but it arifes in part from'
the peculiar planners and cuftoms of the peoplcj^
which oblige every mafter of a family to hire a
whole houfe frgm top to bottom. A dwellingr
houfe in England mean^ every thing that is conr
tained under the fame roof. In France, Scot-
land, arid many other parts of Europe, it fre-
quently means no more than a fingle ffory. A
tradefman in London is obliged to hire a ^hole
houfe in that part of the town where his cuftom- -
ers live. His fhop is upon the ground -floor,
and he and his family fleep in the garret; and
he endeavours to pay a part of his houfe-rent by
letting the two middle ftories to lodgers. He
e^fpeds tp niaintain his family by his trade, and

npi;

THE WEALTH 6F NATIONS.

183

not by his lodgers. Whereas, at Paris and'^ ^^ **•
Edinburgh^ the people who let lodgings have
commonly no other means of fubfiftence; and
the price of the lodging muft pay, not only the
rent of the houfe, but the whole expehce of the
^mily.

PART II,

Inequalities occafioned by the Policy of Europe.

C U C H are the inequalities in the whole of
the advantages and difadvantages of the dif-
ferent employments of labour and flock, <vhich
jhe defeft of any of the three requifitcs above-
mentioned muft occafion, even where there is
the moft perfeft liberty^ But the policy of Eu-
rope, by not leaving things at perfeft liberty^
pccafions other in'equalities of mqch greater im-
portance.

It does this chiefly in the three - follQwing
ways. Firft, by reftraining the competition ^ in
fome employnrients to a fmaller number than
would otherwife be difpofed to enter into them;
fecondly, by increafing it in others beyond what
]t naturally would be; and, thirdly, by obftruft-
ing the free circulation of labour and ftock, both
from employment to employrn^nt and from place
;o place.

First, The policy of Europe occafions a very
important inequality in the whole of the advan-
tages and difadvantages of the different employ-
ments of labour and ftock, by reftraining the

N 4 competitioA

i»4 THE NATURE AND CAUSES OF

> i
I.

BOOK competition in , fome employments to a fmaUer

number than might pthcrwife be difpofed to enter
into them.

The exclufiye privileges of corpprations are
the principal means it ni^kes ufe of for fhis pur-r
pofe.

The exclufive privilege of an incorporated
trade neceflarily reftrains the competition, in the
town where it is eftabliflied, to thqfe who are
free of the trade. To have ferved an apprcn-
ticefhip in the town, under a naaftef properly
qualified, is commonly the neceflary requifite for
obtaining this- freedom. The bye-laws of the
corpcJration regulate fometime? the number of
apprentices which any mafter is allowed to have,
and almoft always the number of years which
each apprentice is obliged to ferve. The inren-
pon of both regulations is to reftrain the compe-
tition to a much fmaller number than might
otherwifc be difpofed^ to enter into the trade,
Th^ limitation of the number of apprentices re-
ftrain^ it direftly. A long term of apprenticefhip
reftrains if more indireftly, bqt as efFeitually, bjr
increafing the expepce of edqcatipq.

In Sheffield no mafter cutler can have more
than one apprentice at a time, hy a bye-law of
the corporation. Iq Norfolk and Norwich no
mafter weaver can have mpre than two appren-
tices, • under pain of forfeiting five pounds a
month to the king. Nq piafter hatter can have
more than two apprentices any-where in Eng-
land, or in the Enghf];^ plantations, under pjiin
of forfeiting .five pounds a month, half to the

. king.

- /

THE WEALTH OF NATIONS. if 5

kingi and half to him who (hall fue in any court P ^^ ^*
of record. Both thefe regulations, though they
have been confirmed hy a public law of the
kingdom, are evidently diftated by the fame
corporation Ipirit which enafted the bye-law of
Sheffield. The lilk weavers in London had
icarce b,een incorporated a- year when they en^
afted a bye-law, rcftraining any matter froin
having more than two apprentices at a tinie* It
required a particular adt of parliament to refcind
this bye-law.

Seven years feem anciently to* have been, all
over Europe, the ufual term eftabliihed for the
duration of apprentic^fhips in the greater part of
incorporated trades. All fuch incorporations
were anciently called univerfities j which indeed
is the proper Latin name for any incorporatioa
whatever. The univerfity of fmiths, the uni^
yerfity of taylors, &c. ^ are expreffions which we
commonly meet with in the old charters of an-
cient towns. When thofe particular incorpora-
tions which are now peculiarly called univer-
fities were firft eftabliihed, the term of years
vhich it was neceffary to ftudy, in order to ob-
tain the degree of matter of arts, appears evi-
dently to have been copied from the term of
apprenticelhip in conamon trades, of which the
incorporations were much piqre ancient. As to
have wrought feven years under a matter pro-
perly qualified, was neceflary, in order to entitle
^ny perfon to become a matter, and to have him-
fclf apprentices in a common trade i fo to have
ftudied feven ypars ijnder a matter properly qua-

lifiedj

iM THE NATURE AND CAUSES pP

BOOK Hfied, was rieceflary to entitle Kim to become i|

ti.. .J., I 4 mafter, teacher, or doftor (words anciently lyno-
nimous) in the liberal artsl, and tp have fcholar^
or apprentices (words likewife originally fyiio*
pimous) to ftudy under him.

By the 5th of Elizabeth, comnrionly called the
Statute of Apprentice/hip, it was en&fted, that;
no pcrfon (hould for the. future exercife any trade^
craft, or rrtyftery at that tinme exercifed in Eng-
land, unlefs he had preyiouQy ferved to it an
^pprenticefliip of kstn years at leaft ; and what
!>efore had been the bye-law of many particular
corporations, became in England die general
• find public lait of all trades carried on in mar-t
}cet towns. - For though the words of the ftatute
jire very general, and feem plainly to include the
whole kingdom, by interpretation its operation
lias been limited to market towns^ it having
been held that in country villages a perfon may
pxercife feveral difFerent trades, though he has
pot ferved a feven years apprentjcefhip to each^
jhey being neceffary for the Conveniency of the
inhabitants, and the number of people fre-
quendy not being fuffigient to fupply each with
% particular fet of hands.

, By a ilrick interj^retation of the words too the
operation of this ftatute has been limited to thofe
^:rad^s which were eftablilhed in England before
the 5 th of Elizabeth, and has never been ex-
tended to fuch as h^ve been introduced fince
that time. This limitatibn has siven occafion
to feveral diftinftions which, confidered ^s rules^
6r police, appear as fqolilh as can well be ima-
gined^

THE Wealth qf naticnsl 1S7

giAed. It has been adjudged^ for ejcftmple, that chap,
a coaeh-maker can neither himfelf make nor
employ journey nnen to make his coach-wheels 5
but muft buy them of a maftcr wheel- wright j
this latter trade having been exercifcd in Eng-
land before the 5th of Elizabeth. But a wheel-
wright^ though he has neyer feryed an appren-
ticefhip to a coach-maker, may cither himfelf
make or employ journeymen to make coaches ;
the trade of a coach-maker not being within the
ftatute, becaufe not cxercifed in England at the
time when it was made. The manufeftures of
Manchefter, Birmingham^ and Wolverhampton^^
are many of them, upon this account, not withifl^
the ftatute ; not having been exercifed in Eng-
land before the 5th of Elizabeth^

I If France, the duration of apprenticefhips is
different in different towns and in differeni;
trades. In Paris, five years is the term require^
in a great number 5 but befprp any perfon can bt
qualified to exercife the trade as a maftcr, ha
fnuft^ in many of them, ferve five years more a^
a journeyman. During this Jatter term he is
called the companion of his mailer, and the terit^
itfelf is called his companionfhip.

In Scotland there is no geheral law which re-
gulates qniverfally the duration of apprentice-
fliips. The term is different in different corpq-p
rations. Where it is long, a part of it may
generally be redeemed by paying a fmall fine.
In moft towns too a very fmall fine is fufficient
to purchafe the freedom of any corporation. The
weavers of linen and hempen cloth, the principal

|S9 THE NATURE AND CAUSES OF

^ ^ o K riianufeftures of the -country, as well as all othci^
artificers fubfervient to them, wheel-makers, reel-
makers, &c. may exercife their trades in any towii
corporate without paying any fine. In all towns
corporate all perfons arc free to fell butcher's
meat upon any lawful day of the week. Three
years is in Scotland a common term of appren-
niceftiip, even in fome very nice trades ; and in
general I know of no country in Europe in
which corporation laws are fo little oppreffive.

(^ The property which eVeiy man h^ iq his owa
labour, as it is the original foundation of all
other property, fo it is the mofl facred and in-
violable. The patrimony of a poor man lies ia
the ilrength and dexterity of his hands -, and to
hinder him from employing this ftrength and
.deirterity in what manner he thinks proper with-
out injury to his neighbour, is a plain violation
of thi§ mqft leered property. It is a manifeft
encroachment upon the juft liberty both of the
.workman, and of thofe who might be difpoffed
.to employ him. As it hinders tl^e one from
;Working at what he thinks proper, fo it hinders
the others from employing whom they think
proper. To judge whether he is fit to be cmr
ployed, may fqrely be tfufted to the difcretion of
the employers whofe intereft it fo much concern^.
The afFefted anxiefy of the l^w-giver left they
Ihould employ an improper perfon, is evidently
as impertinent as it is oppreffive.

The inftitution of long apprenticefhips can give
|T0 fecurity that infufficient workmanfhip fhall not
frequently be expofed to public fale. When this

THE WEALTH OF NATIONS. 189

IS donie it is generally the efFeft of fraud, and ^ ^^ ^*
not of inability; and the longeft apprehticefhip
can give no fecurity againft fratid. Quite dif-
ferent regulations are neceffary to prevent this
abufe. The ftcrling mark upon plate, and the
ftamps upon linen and woollen cloth, give the
purchafer much greater fecurity thari any ftitute
ef apprenticefhip. He generally looks at thefe,
but never thinks it worth while to enquire whe-
ther the workmen had ferved a feven years ap-
prenticelhip.

The inftitutioa of long apprenticeftiips has*
no tendency to form young people to induftryi
A journeyman who works by the piece is likely
to be induftrious, becaufe he derives a benefit
from every exertion of his iriduftry. .An ap-
prentice is likely to be idle, and almofl: always
is fb, becaufe he has no immediate intereft to be
othcrwife. In the inferior employments, the
fweets of labour confift altogether in the recom-
peace of labour. They who are foonef): in a
condition to enjoy the fweets of it^ are likely
fooneft to conceive a relifli for it, and to acquire
the early habit of induftry. A young man na-
turally conceives an averfion to labour^ when
for a 4ong time he receives no benefit from iti
The boys who are put out apprentices from
public charities are generally bound for more
than the ufual number of years^ and they gene-
rally turn out very idle and worthlefs.

Apprenticeships were altogethdr unknown to
the ancients. The reciprocal duties of matter
and apprentice make a confiderable article in

every

I90 THE NATURE AND CAUSES OF

BOOK trety modem code. The Roman law is per-
feaiy filent wkh regard to them. I know no
Greek or Latin word (I might venture, I be-
lieve, to aflert that th«re is none) which ex-
preffes the idea we now annex to the word Ap-
prentice, a fervapt bound to work at a particular
trade for the benefit of a mafter, during a terna
of years, upon condition that the matter fliall
teach him that trade.

LoNO apprenticcfhips arc altogether linne-
<;effary. The arts, which are much fuperior te
common trades, fuch as thofe of making clocks
smd watches, contain no fuch myftery as to re-
quire a long courfe of inftruftion. The firit
invention of fuch beautiful machines, indeed^
and even that of fome of the inftrumcnts em-
ployed in making them, mull, no doubt, have
been the work of deep thought and long time,
and may juftly be confidered as among the hap*
pieft efforts of human ingenuity. But when
both have been fairly invented and are well un-
'derftood, to explain to any young man, in the
completeft manner, how to apply the inftru-
ments and how to conftruft the machines, can-
not well require more than the leflbns of a few
weeks : perhaps thofe of a few day6 might be
fufficient. In the common mechanic trades,
thofe of a few days might certainly be fufficient.
The.de.xterity of hand, indeed, even in common
trades, cannot be acquired without much prac-
tice and experience. But a young man would
praftife with much more diligence and attention,
if from the beginning he wrought as a journeys

man*

THE WEALTH OF NATIONS; 191

hian, being paid in proportion to the little work ^ ^^^ ^*

which he could execute, and paying in his turn w, r^ ■■»

for the niaterials which he might fometimes Ipoil

through awkwardncfs and inexperience. His'

education would generally in this way be more

effeftuali and always lefs tedious and expcnfive.

The matter, indeed, would be a lofen He

would lofe all the wages of the apprentice^ which

he now favesj for feven years together. In thd

end, perhaps, the apprentice himfclf would be i

lofcr. In a trade fo cafily learnt he would have

more competitors, and his wages, when he came

to be a complete workman, would be much lefs ^ i j I

than at prefent. The fame increafe of competi- hL^L ^ c4%a^x*.

tion would reduce the profits of the matters ast'^ 6t&t^ /Wt*

well as the wages of the worknlen. The trades^>>v</Kt unfuJUj C{

the crafts, the myfteries, would all be \oStrsjlt/v^i^t Aa^^a^c

But the public would be a gainer, the work of(^ f^LA.UJ!t^

all artificers, coming in this way much cheaper tcM^^^ol C*, *'v. /,

market. u^m^CZoL^

It is to prevent this reduction of pricq, and
confcquently of wages and profit, by reftrainirig
that free competition which would ^noft certainly
occafioi) it, that all corporations, and the greater
part of corporation laws, have been eftablilhed.
In order to ereft a corporation, no other autho-
rity in ancient times was requifite in many parts
of Europe, but that of the town corporate im
which it was eftablifhed. In England, indeed,
a charter from the king was likewife neceflary.
But this prerogative of the crown feems to have
been referved rather for extorting money from
the fubjeft, than for the defence of the' common

liberty

1^2 THE NATURE AND CAUSES OP

BOOK tibertjr againft ftlch oppreflive monopolies. Upon
paying a fine to' the king, the cfharter feems ge-
nerally to have been readily granted j and wheti
any particular clafs of artificers or traders
thought proper to aft as a corporation without a
charter, fuch adulterine guilds, as they were
called, were not always disfranchifed upon that
account, but obliged to fine annually to the king
for perraiffion to cxercife their ufurped privi-
leges*. The immediate infpeftion of all cor-
porations, and of the bye-laws which they might
think proper to enaft for their own government,
belonged to the . town corporate in which they
were eftablilhed -, and whatever difciplihe was ex-
ercifed over themj proceeded commonly, not
from the king, but from that greater incorpora-
tion of which thofe fubordinatc ones were only
parts or members.

The government of towns corporate was alto^
gether in the hands of traders and artificers j and
it w^s the manifeft intereft of every particular
clafs of them, to prevent the market from being
over-ftocked, as they commonly exprefs it, with
their own particular fpecies of induftry j which
is in reality to keep it always under-ftocked.
Each clafs was eager to eftablilh regulations
proper for this purpofe, and, provided it was al-
lowed to do fo, was willing to confent that every
other clafs Ihould do the fame. In confequence
of fuch regulations, indeed, each clafs was
obliged to buy the goods they had occafion for

* See Madox Firma Burgi, p. 26, &c.

from

THE I^EALTtt Of NATtONS.' ' if|

from every other * within the town^ fotiKwhat ^ ^^^ ^*
dearer- than they btherwife might have done;
But in recompence, they were enabled to fell
their ownjuft as much dearer; fo that.fo far it
was as broad as long, - as they fay i and in the
dealings of the different clafles within the town
with one another, none of tlTem were lofers by
ihefe regulations. But in their dealings with
the country they were all great gainers j and in
thefe Jatter dealings confifts the whole trade
which fupports and enriches every town.

Every town draws its whole fiibfiftendei and
all the materials of its induftry, from the country.
It pays for thefe chiefly in two ways : firft, by
fending back to the country a part of thofe ma-
terials wrought up and manufaftured j in which
cafe their price is augmented by the wages of
the workmen, and the profits of their > matters or
immediate employers : fecondly, by fending to
it a' part both of the rude and manufaftured pro-
duce, either of othet* countries, or of diftanfi
parts of the fame country, imported into the
town 5 in which cafe too the original price of
thofe goods is augmented by the wages of the
carriers or failors, and by the profits of the mer-*
chants who employ them. In what is gained
upon 'the firft of thofe two branches of com«
merce> confifts the advantage which the town
makes by its manufaftures -, iri what is gained
upon the fecond, the advantage of its inland and
foreign trade. The wages of the workmen, and
the profits of their different employers, make yp
the whole of what is gained upon both. Whai-

Voj-. 1. O cv^

1
J

If4 THE NATURE AND CAUSES 0^

w o^o K ^er regulations, therefore, tend to incretfe thcrf^
wages and profits beyond what they odierwi^
would be» tend to enaUe the town to purchafe,
with a fmaUer quantity of its labour, the produce
of a greater quantity of the labour of the country.
They give the traders and artificers in the towit
an advantage over the landlords, farmers, and
labourers in the country, and break* down that
natural equality which would otherwife take place
in the commerce whidh is carried on between
them. The whole annual jproduce of the la-
bour of the fociety is annually divided between
thofe two different fets of people. By means of
thofe regulations a greater fhare of it is given to
the inhabitants of the town than would other-
wife fall to them; and a leis to thoie of the
country.

The price which the town really pays for the
provifions and materials annually imported into
it, is the quantity of manufactures and other
goods annually exported from it. The dearer
the latter are fold, the clieaper the former are
bought. The induftry of the town becomes
more, ami that of the country kfs advanta-
^geous.

That the induftry which is carried on in
towns is, cjvery-where in Europe, more advan-
tageous than that which is carried on in the
country, without entering into any very nice
computations,, we may fatisfy ourfelves by one
rery fimjiie and obvious obfervation. In every
country of Europe we find, at leaft, a. hundred
people who have acquired great fortunes from
^ i^nali

•

induftry which prpperly belongs tq townsi, for
oi3ie who W doac ib by that which properly bc-
iQ^igs. to. the country^ the railing of rude pro-
duce by the improvement aod cultivation of la^ndl*
induftry^ thftrefore> tauft be hctter^ewardcdj the
wages of labour $nd the profits of flock rauft
evid^tly be greater in the ohe fituation tlian h^
the othcTi But ftock and labour nwurally feel^
the moft advantageous employment/ They na-
turally, thereforei refort as much as they can
to the town, and defert the Counti-y;

The inhabitants Qf a town^ being colli$<5be4
into one place, ean caCly icon^bine t<)gcther»
The moft infignificant trades carried on in town§
have accordingly, in foitic plaCe or otheri been
incorporated i and even where they have never
been incorporated) yet the corporation fpirit, th^
jealpufy of ftrangfrs> the averfida tp take appren-r
tiCes, or tq Communicate the fecret of their tradej
generally prevail in thi^nf^i and oftpn teach them^
by voluntary a0bCiations and .^greementSi ta
prevent that free competition" which they can-
not prohibitj by byc-kwsw The trades which em-
ploy but a fmall number of hands, run naoft
«afily into fuCh combinations. Half a dozen
wool-combers> perhaps, are neccflary to keep ^
thoufaftd Ipinners and weavers at work. By
combining not to take apprentices they caft not
only engrofs the cmplpynient, . but reduce thf
whole manufafture into a fort of flavery to thcrp-
lelvcs, apd raile the price pf their labour much
above what i; dq^ to the nature of th^ ^r}f .

O a . Tm

196 THE ' NATURE AND ' CAUSES OP

' The inhabitants of the country^ dilperfed in
diftant places, cannot cafily combine together.
They have not only never been incorporated,*
but the corporation fpirit never has prevailed
annong them. No apprenticeffiij^ has ever bcenr
thought neceflary to qualify for hufbandry, the
great trade of the country. After what are called
riie fine arts, and the liberal profeffions, how-
ever, there is perhaps no trade which recjuires fo
great a variety of knowledge and experience.
The innunnerable volumes which have been writ-
ten upon it in all languages, may fatisfy us, that
among the wifeft and moft learned nations, it
has never been regarded as a matter very eafily
underftood. And from all thofe volurties we
Ihall in vain attempt to colleft that knowledge
of its various and complicated operations, which
ts commonly pofleffed even by the common far-
mer; how contemptuoufly foever the very con-
temptible authors of fome of them may fome-
tingies afFc6t to fpeak of him. There is fcarce
any common mechanic trade, on the contrary,
of which all the operations may not be as com-
pletely and diftinftly explained in a pamphlet of
a very few pages, as it is poffible for words il-
luftrated by figures to explain them In the
hiftory of the arts, now publifliing by the French
academy of fciences, feveral of them are ac-
tually explained in this manner. The direc-
tion of operations, befides, which fnuft be va-
ried with every change of the weather, as well
as with many other accidents, requires much
more judgment and difcretion, than that of
' ' ' • thofe

• THE WEAI^TH OF NATIONS. 197

thofe which are always the f^me. or very nearly ^^^^ **•
the fame, ''

Not only the art of the. farnrjer, the general
direftion of. the operations of hufbandry, but
many inferior branches of country labour, require:
much more Ikill and experience than the greater
part of mechanic trades. The man who worlds
upon hrals and iron, works with inftruments and
tipon materials of which the temper is always the
fame, or very nearly the fame. But the man who
ploughs the gjround with a team of horfes or oxen,
works with inftruments of which the health,
ftrength, and temper, are very different upon dif-
ferent occafions. The condition of the materials
which he works upon too is as variable as that of
the inftruments whixrh he works with, and both
•require to be managed with niuch judgment and
fiifcretion. The common ploughman, though
generally regarded ,as the pattern of ftupidity
^nd ignorance, is feldom defeftive in this judg-
ment and difcretion. He is lefs accuftomed,
indeed, to focial intercourfc than the mechanic
who lives in a town. His voice and language
are more uncouth and more difficult to be un-
derftood by thofe who are not ufed to them. His
underftanding, however, being accuftomed to
confider a greater variety of objefts, is generally
jnuch fuperior to that of the other, whofe whole
attention from morning till night is conimonly
pccupied in performing one or two very fimple
operations. .How much the lower ranks of people
in the country are really fuperior to thofe of the
jown^ is well known to every man whom either

O 3 bufincfs

r^B

TFTE NATURE AND CAUSES OP

^,:9i^^ bufthefs 6r curiofity has ted to tronvtrfe mudi
with both. In China and Indoftan accordingly
both the ranH and the wages of country labourers
affe faid to be ftiperior to thofe of the greater
part of artifiters and manufafturers. They woxiI4
probably be fo every- where, if corporation laws
and the corpprapon fpirit did not prevent it.

TWE fuperiority Which the indoftiy of the
0wns has evcry-where in Europe oyer that of
the country, is not altogether owing to corpora-
tions aiid corporation laws. It is fupportal by
fnany other regulations, The high duties upon
foreign Snanufaftures arid upon ^1 goods im-
|)Orted by alien merchants, dl ttnd to t}\c fame
purpofe. Corporation laws enable the inhabit-
ants of towns to raife their prices, without fear-
ing to he under- fold by the free competition of
their own countrymen. Thofe other regulations
fecure them equally againll that of foreigners..
The enhancement of price occafioned by both is
^vfery- where finally paid by the landlords, farm-
ers, and labourers of the country, who have
fel^Qiti oppofed the eftablifhment of futh mono-
polies. They haye commonly neither inclina-
tion nor Htnefs to enter into combinations ; and
the clamour and fophiltry of merchants and m^-
nufafturers eafily perfuade them that the private
intereft of a part, and of a fubprdinatc part of
the fociety, is the general intereft of the whole.

In Great Britain the fuperiority of '^he induftry
of the towns pver that of the "country, feefns to
have been greater formerly than in the prefent
tirnes. The v^ages of country labour appfoach

3 nearer

THE WEALTH OF NATIONS. tM

neaitr ta thofc of manufafturing labour, and the ^ \^ **•
profits of ftoclc employed in agriculture to thoiib
of trading and manufa&uring ftock, than ^they
ire fiud to have done in the ^ft century, or in
the beginning of the prefent. This change may
be regarded ^ the necefiary, though very late
confequence of the extraordinary encouragement
given to the induftry of the towns. The ftock
accumulated in them comes in time to be io
great, that it can no longer b^ employed with
the ancient profit in that fpecies of induflry
which is peculiar to them. That induftry has
its Emits like every other \ and the increafe of
flock, by increafing the competition, neceffa-
rily reduces the profit. The lowering of profit
}n the town forces out flock to the country,
where, by creating a new demand for country
labour, it nec^flarily raifes its wages. It then
fpreads itfelf, jf I may fay fo, oyer the fece of
die land, and by being employed in agriculture
is in part reftored to the country, at the expenci^
of/ which, in a great^ raeafure, it had originally
been accumulated in the town. That every-
where in Europe the greatdt improvements of
the country have been owing to fuch overflow*
ings of the ftock originaily accumulated in the
towns, 1 ihall endeavour to (bow hereafter \ and
at the fame time to demonflxate, that though
ibme countries have by this courfe attained to a
confiderable degree of opulence, it is in itfelf
(ieceilarily flowj uncertain, liable to be difturbed
and interrupted by innumerable accidents, and
in every rdpe£): contrary to the order of nature

O 4 and

%9% THE NATURE AND CAUSES OP

' ® ^j^ '^ arid of rcafom The intef efts, prejudioes> laara
and puftoms which have given occafion to it> I
ihall endeavpur to explain as fully and diftinAly
as I c^ in the third and fourth books c^' tbia
inquiry.

People of the faoie trade feldQn[> meet togc-:
ther, even for merriment and diver lioi), but the
conversation . ends in a cpnipir^iGy againft the
public, or in fome contrivance to raife prices.
It is impoffible indeed to prevent fuch meetings^
by any law which either could be executed, or
would be confiftent with liberty and juftiee. But
though the law cannot hinder people of the fame
trade froni forpetimes aflfmbling together, it
ought to do nothing to facilitate fuch aflemblies ;
much Icfs to render them neceflary.

A REGULATION which obljges all thofe of the
fame trade in a particular town to enter their
names and places of abode in a public regifter,
facilitates fuch aflemblies. It connefts indivi-
•duals who might never otherwifp be known to
one another, and gives every man of the trade a
direftion where to find every other man of it.

A REGULATION which enables thoie of the fame
trade to tax themfelves in order to provide fiir
their poor, their fick, their widows and orj)hans,
by giving them a common intereft to manage,
renders fuch aflemblies neceflary.

An incorporation not only renders them ne-
ceflary, but niakes the aft of the majority bind-
ing upon the whole. In a free trade an effcftual
• combination cannot be eftablilbed but by the
' ^unafiiipous confcnt of every fingle .trader, and it

(rannot

THE WEALTH OF NATIONS. aoi

cannot laft longer thah every fingle trader conti« ^ ^^ ^*
nucs of the fame mind. The majority of a cor-
poration, can ena<5t a bye-law with proper penalties,
which will limit the competition more elFedually
and more durably than any voluntary combination
whatever.

The pretence that corporations are necefikry
for the better government of the trade, is with-
put any foundation. The real and effe^lual dif*
cipline which is exercifed over a workman, is
not that of his corporation, but that of his
cuftomers. It is the fear of Ipfing their ennploy-
ment which reftrains his frauds and correds his
negligence. An exclufive corporation neceC-
farily weakens the force of this difcipline. A
particular fet of workmen muft then be em-
ployed, let them behave well or ill. It is upon/
this account, that in many large incorporatea
towns no tolerable workmen are to j?e found/
iBven in» fome of the moft neceflary trades. If
;yoi) would have your work tolerably executed,
it mfuft be done in the fuburbs, where the wprk-
pien, having po exclufive privilege, have nothing
but their char^dbier to depend upon, and you
muft then fmuggle^ it into the town as- well as you
•can.

It is in this manner tjiat the policy of Europe,
by reftraining the competition in fome employ-
fnents to a fmaller i^umber than would otherwife
:be dilpofed to enter into them, occafions a very
important inequality in the whole of the advaq-
. l^ges and difadvantages of the different employ-
ments of labour And ftock.
.'" ».-•»...■■... .• ,

Secondly,

ti» TIffi NATURE AND CAUSES OF

B o^ o K SsQONDLr, Tbt pcdicy of £urope, by inci

the competition ia fome employments b^bnd whae
k niturally would be, occafions anocher inequalkf
of an oppofi^e kind in the whole of the advantages
and diiadvants^ges of the different employnients of
labour and ftock.

It J^as been coiifidered as of ib math import-*
ance diat a proper number of young people
ihouM be educated for certain profeffions^ thac«
Ibmetimes the public, and ibmetimes die piety
of private founders have eibabliihed many pen*
iions» fcholarfhips, exhibitions, burfaries^ &c«
for this purpofe, which draw many more peepk
into thofe trades than could othbrwife pretend td
fellow them. In all chriftian countries, I be-
liew, the >ed«ication of the greater part of churdi*
men h paid for in this manner. Very few f£
ifaem are educated altogether at their own «c-
pence. The long, tedious, and ^expenim educa-
tion, dierefore, of thofe who are, will not alwaiys
procure them a fuitable reward, the clmrch being
crowded witfi -peojJe who, in order to get •€«!-
ployrhem, are willing to accept of a inudi fmaftr
TeGompence than what fuch an education would
otherwjfe have entitled them to; and in ibis
manner the competiuon of the poor takes sway
^dle reward of iht rich. It would be indecent,^
no doubt, to compare either a curate or a ciiaplain
^ith a jcmrncyman in any common trade. The
pay of a curate or chaplain, however, amy very
properly be confidcred as of the fame nature
with tiie wages of a journeyman. They are, all

three, paid for their work acc(yrdmg to the con

tra<ft

1'HE WEALTH 0» NATIONS. $^

traa ^ich they hiay happen to make with their ^ \^ ^*
refpe^vc foperiors. Tfli after die middle of
the fourtccrtth century, five meiks, containing
abotit as much fihrer as ten pounds of our puc-
fent money, was in England the ufual pay of a
curate or a ftipendiary parilh prieft, as we find it
regulated by the decrees of feveral different na-
tional councils. At the fame period four pence
a day, cont^ning the fiune quantity of filver as
a ihihing of our prcfetit money, was declared to
be the pay of a mafter mafon, and three pence
a day, equal to nine pence of our prefcnt money,
that of a journeyman mafon *. The wages Of bodi
thefe labourers, diercfore, foppofing them to
have been conftantly • employe^ were mfuch for •
perior to thofc of tte curate. The wages of tte
mafler maibn, foppofing him to have been with^^
out employment one ' riiird of the year, wotU
have foRy equalled ^em. By the 1 2th of Qutfeii
Anne, c. 1 2, It is declared^ ^* That whereas fas
^' want of fofficient maintenance and encoasrra^
•' tncnt to curates, tfce cures have in ievet^
^' places been meanly fupf^ed, the biftep is^
** therefore, empofwered to ajrpoint fey writing
^ under his hand and *ftal a fofficient eeitaiii
^* ftipand or allowanee, not esceeading fifty and
^* not lels than twenty pounds a year." Fmtf
pounds a year is reckoned -itt preftnt very
good pay for a curate, ^uid notwitUlanding
this a6l: ef parliament, tfiere are many cora*
cies tinder twenty pounds a year. There »t

^ Sfo^dia 9uiiiia4>r4aboimii,' ay Bd. IH.

journeymen

ao4 THE NATURE AND ' CAUSES OP

».Q o K j^yi#fleymcn ftioc-makers in London ^who earn
forty pouads a year, and there is fcarce an. in-.
duilriou8 workman of any kind in that metro-
poli* who does not earn, more than twenty. This
l^fl fum indeed does i>ot exceed what is fre-
quently earned by common labourers in many
country parifhes. Whenever the law has at-
j tempted to regulate the wages of workmen, \\
{has always been rather lo lower them than to
traife them. But the law has upon many occa*
lions attenipted to taife the wages of curates,
and for the. dignity of the church, to oblige the
redtors of parilhes to give them more than the
wretched maintenance which they {hemfelves
m^ht be willing 'to accept of. And in both
cafes the law feems to h;ave been equally ineffec-
tual, and has never either been >ble to raife thq
w[ages of curates, x)r to (ink thofe of labourers tq
the degree that was intended^ bej:au{e it has ne-
ver *,been able to hinder either the one from being
willing to accept of lefs than the legal allowance,
on account of the indigence of their fituation
and the multitude of their competitors;, or the
other from receiving more, on account of the
contrary con^petition of thofe who expefbed to
derive either profit or pleafure fronii employing
them.

The great benefices and other ecclefiafticajl
dignities fupport. the honour of the church, not-
withftanding the mean circumftances of fome of
its inferiijr rnembers. The relpedt paid to th^
profeflion too makes fome compenfation even to
them for the meannefs of. their pecuniary recom-
, . ' pence.

THE WEALTH OF NATIONS." 265

pence. In England, and in all Roman Catholic c ha p.
countries, the lottery of the ' church is in reality
much more advantageous than . is neceflary. The
example of the churches of Scotland, o£ Geneva,
and of feveral other proteftant churches, may fa-f
tisfy us, that in fo creditable a profcflion, in which
education is fo ^afily procured, tke hopes of much
more moderate benefices will draw a fofficient
number of learned, decent, and. rcfpeftable men
into holy orders.

In profeffions in which there are no benefices,
fuch as law and phyfic, if an eqiid proportion
of people were educated at the public expence,
the competition would^ foon be fo great, as to
fink very much their pecuniary reward. It
might then not be worth any man's while to edu-
cate his fon to either of thofe prpfefllons at his
own expence. They would be entirely abandoned
to fuch as had been educated by thofe public
charities, wfiofe numbers and neceflities would
oblige them in general to content themfelves with
a very miferable recompence, to the entire de-
gradation of the now refpeftable profeflions of law
and phyfic.

That unprofperous race of men corhmonW
called men of letters, are pretty much in the fitui
ation which lawyers and phyficiarts probably\
would be in upon the foregoing fuppofuion. In
every part of Europe the greater part of them
have been educated for the church, but have
been hindered by different reafons from entering
into holy orders. They have generally, there-
fore, been educated at the public expence, and

their

2^ rai NATORi Aid» causes op

^ ^^^ ^ tStmr nmnhers are cveiy^where fo gicat ins c€un«
monly ta reduce the price of their hboor to a
verf pauloy recooapeoce. .

Befoxe the inventioD of die art of priodag,

die only emf^yment by which a man of letfsers

Could make any thing by his talents, was that of

a puiaixc or priratt teacher, or by communicating

to other people the curk>us and ufefiil know--

hdgt which he had acquired himfeif : And thia

is ftill furely a more honourable, a more ufeful»

^ in general even a more profitable emj^loy-*

ment than thiie other of writing for a bookseller,

to which the art of printing has given occafion.

The time and ftudy> the genius, knowledge^ and

application requilite to qualify an egiinenc

teacher of the fciences, are at lead equal to whs^

is neceflary for the greateft praftitioners in law

and phyfic. But the ufual reward of the emi^

nent teacher bears no proportion to that of the

lawyef or -phyfician; becaufe the trade of the

one is crowded with indigent people who have

been brought up to it at the public expencei

whereas thofe of the other two are incumbered

with very few who have not been educated ac

their own* The ufual recompencc, however, of

public and private teachers, fmall as it may

appear, would undoubtedly be lefs than it is, if

the competition of thofe yet niore indigent men

of letters who write for bread was not taken out

j of the markets Before the invention of the art

lof printingi a feholar and a beggar feem to have

been tenem very nearly fynonymous« The dif^

ferent governors ^ tb^ ittiiverfuics before thae

time

THE WEALTH OF NATIONS. • m^

time appear to have often granted licences tso thcti' ^ ^^ '•
fcholars to beg.

In ancient times^ before any chariiies of this,
kind had been eftablifhed for the education of
indigent people to the learned profcffions, the
rewards of eminent teachers appear to have been
mtich fnore confiderable. Ifocrates, , in what is
called his difcourie againft the fophifls, re*
proaches the teachers of his own times with in-
confiftency. " 1 hey make the moft magnifi'*
cent promifo to their (cholars> fays he, and un«
dertake to teach them to be wiie, to be happy^.
and to be juftj and in return for fb important a
fervice they (lipulate the paultry reward, of four
or five minac. They who teach wifdom, con-
tinues he, ought certainly to be wife themfelves;
but if any xf\SLn were to fell fuch a bargain for
fiich a price, be would be convi&ed of the moft
evident folly." He certainly does not me^n
here to exaggerate the reward, and we may be
ajQured that it was not kfs than he reprefents it.
Four min£ were equal to thirteen pounds fix
(hillings and eight pence: five minse to fixteen
pounds thirteen (hillings and four pence. Some-
thing not leis than the largeft of thofe two fums,
therefore, muft at that time have been ufually
paid to the mod eminent teachers at Athens.
Ifocrates himielf demanded ten minae, or thirty-
three pounds fix fliil)ings and eight pence, from
each fcholar. When he taught at Athens, he is
(aid tt> have had an hundred fcholars. I.under*^
ftand this to be the number whom he taught at
mt timtj or who aitmded w^at we would call

' one

tot THE NATURE AUb CAUSES Of

BOOK Qne coUrfb of leftures, a number which will Hbt
appear extraordinary from fo great a city to id
famous a teacher^ who taught too what was at
that time the moil faihionable of all fciences^
rhetoric. He muft have tnade, therefore, " by
each courfe of lefturcs, a tlioufand minse, of
3i333^* 6 if. id. A thoufand minae, accord-
ingly, is feid by Plutarch in another place, to
have been his Didaftron, . or ufual price of teach-
ing. Many other eminent teachers in thofe
times appear to have acquired great fortunes*
Gorgias made a prefcnt to the temple of Delphi
of his own ftatue in folid gold« We mull not, I
prefume, fuppofe that it was as large as the lifci
His way of living, as well as that of Hippias
and Protagoras, two other eminent teachc^rs of
thofe times, is reprefented by Plato as fplcndid
even to oftentation. Plato hitt^fclf is faid to
have lived with a good deal of magnificence*
Ariftotle, after having been tutor to Alexander,
and moft munificently rewarded, as it is univer-
fally agreed, both by him and his father Philip,
thought it worth while, notwithftanding, to re-
turn to Athens, in order to refume the teaching
of his fchool. Teachers of the fciences were
probably in thofe times lefs common than they
came to be in an age or two afterwards, when
the competition had probably fomewhat reduced
both the price of their labour and the admiration
for their perfons. The moft eminent of them,
Jioweveri appear always to have enjoyed a degree
of confideration much fuperior.to any of the like
pfrofefilon in the prefcnt times« The Athenians

fenc

^
t

filE WfeAiTk OF NATId^S. . io9

feht Carneades the academic, and Diogenes the chap.
ftoic, upon a folemn embafly to Rome; and
though thtir cit/ h^ then declined from its
former grandeur, it was ftill an independent and
confiderable republic. Carneades too was a
Babylonian by birth, and as thfcre never was a
people more jealous of admitting foreigners to
public offices than the Athenians, their confi-
deration for him mull have been very great.

Tms inequality is upon the whole, perhaps,
rather advantageous th^n hurtful to the public.
It may fomewhat degrade the profeffion of a
public teacher j but the cheapnefs of literary
education is furely an advantage which greatly
over- balances this trifling inconveniehcy. The
public too might derive ftill greater benefit
from it, if the conftitution of thofe fchools and
colleges, in which education is carried on, was
more reafonable than it is at prefent through the
greater part of Europe.

Thirdly:, The policy of Europe, by obftruft-
ing the free circulation of labour and ftock both
from employment to employment, and from
place to place, occadons in fome cafes a very in-
convenient inequality in the whole of the advan-
tages and difadvantages of their different em-
ployments.

The ftatute of apprentidefhip obftrudls the
free circulation of labour from one employment
to another, even in the fame plac6. The exclu-
five privileges of (Corporations obftruft it from
one place to another, even in the fame employ-
tnent.

Vol. I. P It

ai6 THE NATURE ANI> CAUSES OP

It frequently happens that whik hig^ wage$
are ^ven to the workmen in one manufafbire^
thofe in another are obliged to content them-
felves with bare fubfiftence* The one is in an
advancing ftate, and has^ therefore, a continual
demand for new hands: The other is in a de-
clining ftate, and the fuper-abundance of hands
is continually increjtfing. Thofe two ' manufac-
tures may fomctimes be in the fame town, and
fomctimes in the fame neighbourhood, without
being able to lend the leaft afliflance to one
another. The ftatute of apprenticeftiip may
oppofe it in the one cafe, and both that arid an
cxclufive corporation in the odier. In many
different 'manufaftures, however, the operations
are fo much alike, that the workmen could eafily
change trades with one another^ if thofe abdird
laws did not hinder them. The arts of weaving
plain linen and plain filk, for example, are al-
mod entirely the fame. That of weaving plain
woollen is fomewhat different; but the differ-
ence is fo infignificant, that either a linen or s
filk weaver might become a tolerable workman
in a very few days. If any of thofe three capital
manufadtures, therefore^ were decaying, the
workmen might find a refource in one of the
other two which was in a more profperous con-
dition; and their wages would neither rife too
high in the thriving, nor fink too low in the de-
caying manufafture. The linen manufa6ture^
indeed is, in England, by a particular flatute^
open to every body ; but as it is not much cul-
tivated through tbc greater part of the country,

THE WEALTH OF NATIONS. 211

k can afford ho genefal refource to the* ^)w!)rkiTien d h a p.
of other decaying manufaftures, who, wherever
the ftatute of apprenticelhip takes place, have no
other choice but either to come upon the parifli,
or to work as common labourers, for which, by
their habits, they are much worfe qualified than
for any fort of manufafture that bears any re-
femblance to their own. They generally^ there-
fore, chufe to come upon the parifh.

Whatever obftrufts the free circulation of
labour from one employment to another^ ob-
ftrufts that of ftock likewife ; the quantity of
ftock which can be employed in any branch of
bufinefs depending very much upon that of the
labour which can be employed in it. Corpora-
tion laws, however, give lefs obftru<^ion to the
free circulation of ftock from one place to an-,
other than to that of labour. It is every- where
much cafier for a wealthy merchant to dbtain the
privilege of trading in a - town corporate, than
for a poor artificer to obtain that of Working
in it.

The obftruftion which corporation laws give
to the free circulatioh of labour is common, 1
believe, to every part of Europe. That which
is given to it by the poor laws is, fo far as I
l^now, peculiar to England. It confifts in the
difficulty which a poor man finds in obtaining a
fettlement, or even in being allowed to exercife
his induftry in any parifh but that to which hq
belongs. It is the labour of artificers and ma-
nufa6turers only of which the free circulation is
Qbflruded. by corporation laws. The difficulty

? 2 of

ai2 THE NATURE AND CAUSES OF

B, o o K of obtaining lettlements obftru£ts even that of

i_ -J- _' common labour. It may be worth while to give

fomc account of the rife^ progrefs> and prefent

« ftate of this diibrder, the greatell perhaps of any

'fuTV^-C'^l^ the ^^^liefof England.

' yj When by the defbudtion of monafteries the

C^ poor had been deprived of the charity of thofe
religious houfes, after fome other inefieAual at-
tempts for their relief, it was enadled by the 43d
of Elizabeth, c. 2. that every pariih ihould be
bound to provide for its own poor; and that
overfcers of the poor ihould be annually ap-
pointed, who, with the churchwardens, ihould
raife, by a parifh rate, competent fums for this
purpofc.

By this ftatute the neceifity of providing for
their own poor was indilpenfably impofed upon
every pariih. Who were to be conGdered as the
poor of each parifh, became, therefore, a quef-
tion of fome importance. This qucflion, after
fome variation, was at lafl determined by the
13th and 14th of Charles II. when it was en-
afted, that forty days undiflurbed refidence
ihould gain any perfon a fcttlement in any pa-
rifh ; but that within that time it ihould be law-
ful for two juftices of the peace, upon complaint
made by the churchwardens or overfeers of the
poor, to remove any new inhabitant to the parifh
where he was lafl legally fettled; unlefs he either
rented a tenement of ten pounds a year, or could
^ve fuch fecurity for the difcharge of the pariih
where he was then living, as thofe juftices fhould
judge fufficicnt.

Some

THE WEALTH OF NATIONS.

213

Some frauds, it is' faid, were committed in c h a p,
confequence of this ftatutej parilh officers fome-
timcs bribing their own poor to go clandeftinely
to another parilh, and by keeping themfelves
concealed for forty days to gain a fettlement
there, to the difcharge of that to which they
properly belonged. It was enafted, therefore,
by the ift of James II. that the forty days undif-
turbed refidence of any perfon neceflary to gain
a fetdemcnt, Ihould be accounted only from the
time of his delivering notice in writing, of the
place of his abode and the number of his family*
to one of the churchwardens or overfeers of the
parifh where he came to dwell.

But parifli officers, it feems, were not always
more honeft with regard to their own, than they
had been with regard to other parilhes, and
fometimes connived at fuch intrufions, receiving
the notice, and taking no proper fteps in con-
fequence of it. As every perfon in a pariffi,
therefore, was fuppofed to have an intereft to
prevent as much as poffible their being burr-
dened by fuch intruders, it was further enafted
by the 3d of William III. that the forty days
refidence Ihould be accounted only from the pub-
lication of fuch notice in writing on Sunday in the
churgh, immediately after divine fervice.

*' After all," fays Doftqr Burn, " this kind of
« fettlement, by continuing forty days after
<? publication of notice in writing, is very fel-
*^ dom obtained; and the defign of the adts is
«' not fo much for- gaining of fettlements, as for
*^ {he avoiding of them by perfons coming into

P 3 ^* a parifli

114 THE. NATURE AND CAUSES OP

B o o K <« a parifh clandeftinely : for the giving of no-^
** tice is only putting a force upon the parifli to
" remove. But if a perlbn's fituation is fuch,
" that it is doubtful whether he is aihially re-
*^ moveable or not, he fhall by giving of notice
" compel the pariih either to allow him a fettle-
" ment uncontefted, by fufFering him to con-
" tinue forty days ; or, by removing him, to try
«' the right."

This ftatute, therefore; rendered \t alinoft im^
pradicable for a poor man to gain a new fettle-
ment in the old way, by forty days inhabitancy.
But that it might ilot appear to preclude altoge-
ther the common people of one parifh from ever
cftablifhing themfelves with fecurity in another^
it appointed four other ways by which a fettle-
ment might be gained without -any notice de-
livered or publilhed. The firft was, by being
taxed to parifh rates ind paying them; the fe-
cond, by being elected into an annual parifh
office, and ferving in it a year; the third, by
fdrving an apprenticefhip in the parifh; the
/fourth, by being hired into fervice there- for a
year, and continuing in the fame fervixre during
the whole of it.

Nobody can gain a fettlement by cither of the
two firfl ways, but by the public deed of the
whole parifh, who are too well aware of the con-
fequences to adopt any new-comer who has no-
thing but his labour to fupport him, either by
taxing him to parifh rates, or by pleding him
into a parifh -office.

'No

'THE WEALTH OP NATIONS. «tj

No married man can well gain any fettlenqient c h a p.
in cither of the two laft ways. An apprentice is
fcarce ever married i and it , is exprefsly enafted^
that no married fervant Ihall gain any fettlemenc
by being hired for a year. The principal efFeft
of introducing fetdement by fervice, has been to
' put out in a great meafure the old fafliion of-
hiring for a year, which before had been fo^
cuftomary in England, that even at this day, if
no particular term is agreed upon, the law in-
tends that every fervant is hired for a yean But
matters are not always willing to give their fer-
vants a fetdement by hiring them in this manner ;
and fervants are not always willing to be fo hired,
becaufe, as every laft lettlement difcharges all the
foregoing, they might thereby lofe their original
lettlement in the places of their nativity, the ha-
bitation of their parents and relations.

No independent workman, it is evident, whe^
ther labourer or artificer, is likely to gain any
new fettlement either by apprenticefhip or by
fervice-, When fuch a perfon, therefore, carried
his induftry to a new parifh, he was' liable to be^
removed, how healthy and induftrious focver, at
the caprice of any churchwarden or overfcer,
unlefs he either rented a tenement of ten pounds
2uyear, a thing impoflible for one who has no-
thing but his labour to live byj or could give
fuch iecurity for the difcharge of the parifh as
two juftices of the peace Ihoujd judge fufficieht.
What fecurity they Ihall require, indeed, is left
altogether to their diferetion ; but they cannot
^11 require Icfi than thirty pounds, it having

P 4 been

2i6 THE NATURE AND CAUSE8 OF

BOOK been enz&ed, that the purchafc even of a free-
hold cftate of lefs than thirty pounds value*
{hall not gain any perfon a fettkment^ as not
being fufficient for the difcharge of the pariih. But
this is a fecurity which fcarce any man who lives
by labour can give ; and much greater fecurity is
frequently demanded.

In order to reftore in fome mcalure that free
circulation of labour which thpfe different fta- .
tutes had almoft entirely taken away, the invention
of certificates was fallen upon. By the 8 th and
9,th of William III. it was enafted, that if any
perfon fhould bring a certificate from the parifh
where he was laft legally fettled, fubfcribed by
the churchwardens and ovcricers of the poor,
and allowed by twp juftices of the peace, that
every other parifh fhould be obliged to receive
him; that he fhould not be removcable merely
upon account of his being likely to becoijie
chargeable, but only upon his becoming aftually .
chargeable, and that then the parifh whicl^
granted the certificate fhould be obliged to pay
the expence both of his maintenance and of his
removal. And in order to give the mofl perfeft
fecurity to the parifh where fuch certificated man
fhould come to refide, it was further enafted by
the fame flatute, that he fhoujd gain no fettle^
ipent there by any means whatever, except either
by renting a tenement of ten pounds a year, or
by ferving upon his own account in an annual
parifh office for one whole year ; and confe-
quently neither by notice, nor by feryice, nor by
apprenticcfhip, nor by paying parifh rates. Bjr

the

THE WEALTH OF NATIONS. . Uf

thjC I2th of Queen AniK too, ftat. i. c. i8. it was chap.
further erta6te4, that neither the fervants nor ap-
prentices of fuch certificated mm fhould gain any
fcttlement in the parilh wher^ he rpfided under
fpch certificate^

How far. this invention has reftored that free
circulation of labour which the preceding ftatutcs
had almoft entirely taken away, wc may learn
from the following very judicious obfervation of
Poftpr Burn. ^Mt is obvious," fays he, " that
*' there are divers good reafons for requiring
*f certificates with perfons coming to fettle in
^^ my place; namely, that perfons refiding un^
*? der them can gain no fettlement, neither by
^f apprenticeftiip, nor by fervice, nor by giving
" notice, nor by paying parifli rates ; that they
^f can fettle neither apprentices nor fervants j
*' that if they become chargeable, it is ceN
f^ tainly known whither to remove them, and
*f the parifli fliall be paid for the removal^
" and for their maintenance in the mean time;
^f and that if they fall fick,' and cannot be re-
^* moved, the parifli which gave the certificate
*' muft maintain them: none of all which can
f^be without a certificate. Which reafons will
^' hold proportionably for parifhes not granting
*f certificates in ordinary cafes j for it is far
<^ more than an equal chance, but that they will
<' have the certificated perfons again, and in a
f' worfe condition." The mor^ of this obferva^
tion feems to be, that certificates ought always
py be required by the parifli where any poor man
pomes to refide, and that they ought very fcldoin

zi9 THE NATURE AND CAUSES OP

B o o K' to be granted by that which he propofes to leavjc;.
^' " There is fomcwhat of hardihip in this matter
^* of certificates," fays, the iame very intelligent
Author, in his Hiftory of the Poor Laws> " by
«* putting it in the power of a parifh officer, to
•• imprifon a man as it were for lifej however
«' inconvenient it may be for him to continue at
** that {dace where he has had the misfortune to
•• acquire what is called a fettlement, or whatever
«* advantage he may propofc to himfclf by living
«^ elfewhere."

Though a certificate carries along with it no
teftimonial of good behaviour, and certifies no-
thing but that the perfon belongs to the parifh
to which he really does belong, it is altogether
diforetionary in the parifh officers either to grant
or to refufe it. A mandamus was once moved
for, fays Doftor Burn, to compel the church-
wardens and overfeers to fign a certificate; but;
the court o£ King's Bench rejeAed the motion as
a very ftrange attempt.

The very unequal price of labour which we
frequently find in England in places at no great
diftance from one another, is probably owing to
the obftruftion which the law of fettlements give^
to a poor man who would carry his induftry from
one parifh to another without a certificate. A/
fingle man, indeed, who is healthy and induflri-
ous, may fometimes refide by fufFerance without
one; but a man with a wife and family who
ihould attempt to do fo, would in moft parifhes
be fure of being removed^ and if the fingle man
ikould afterwards marry, he would generally be

removed

THE WEALTH OF NATIONS. ^219

removed likewife. The fcarcity of hands in one c hap.
parifh, therefore, cannot always be relieved by
their fuper-abundance in another, as it is xon-
ftantly in Scotland, and, I believe, in all other
countries where there is no difficulty of fettle-
men t. In fuch countries, though wages nnay
fometimes rife a little in tlie neighbourhood of a
great town, or wherever elfe there is an extra-
ordinary demand for labour, and fink gradually
as the diftance from fuch places increafes, till
they fall back to the common rate pf the coun-
try; yet we never meet with thofe fudden and
unaccountable differences in the wages of neigh-
bouring places which we fometimes find in Eng-
land, where it is often more difficult for a poor
man to pafs the artificial boundary of a parifh,
' than^ an arm of the fea or a ridge of high moun-
tains, natural boundaries which fometimes fepa-
rare very diflinftly different rates of wages in
other countries.

To remove a man who has committed no mif^
demeanour from the parifh where he chufes to
refide, is an evident violation of natural liberty
and juflice. The common people of England^
however, fo jealous of their liberty, but like the
common people of mofl: other countries never
rightly underflanding wherein it confifls, have
now for more than a century together fuffered
themfelves to be expofed to this oppreffion with-
out a remedy. Though men of rcfleftion too
have fometimes complained of the law of fettle-
ments as a public grievance 5 yet it has never
been the objcft of any general popular clamour,

3 fuch

22* THE NATURE AND CAUSES OF

BOOK iiicfa as that againft general warrants, an abufive
pradice undoubtedly, but iiich a one as was not
likely to occafion any general oppreffion. There
is ioM'ce a poor man in England of forty years of
age, I will venture to fay, who has not in foine
part of his life felt himfelf mott cruetty oppreilbd
; by this ill-contrived bw of fetdements.
I I SHALL conclude this long chapter with ob-
j ferving, that though anciendy it was ufual to
rate wagps, firft by general laws extending over
the whole kingdom, and afterwards by pardcular
orders of the jufKces of peace in every pardcular
county^ both thefe pra&ices have now gone en-
tirely into difiife. '^ By the experience of above
<' four hundred years," fays Dodor Burn, ^^ it
" feems dme to lay afide all endeavours to bring
'' under .ftrift regulations, what in its own na-
*' ture feems incapable of minute limitadon:
<' for if all perfons in the fame kind of work
^' were to receive equal wages, there would be
'^ no emulation, and no room left for induihy
•* or ingpnuity."

Particular a6b of parliament, however, itiU
attempt fometimes to regulate wages in particu-
lar trades ^nd in particular places. Thus the
8th of George IIL prohibits under heavy penal-
ties all mailer t^ylors in London, and five miles
round it, fi-om giving, and dieir workmen from
accepting, more than two fhillings apd feven-*
pence hal^nny a day, except in the cafe of a
gener^ mourning. Whenever the legiflature
attempts to regulate the differences between
mafters and their workmen, its counfeUors are

always

THE WEALTH OF NATIONS. 12 1

always the mafters* When the regulation, there- c h a p.*
fore, is in favour of the workmen, it is always
juft and equitable; but it is fometimes other-
wife when in favour of the mafters. Thus the
law which obliges the mafters in feveral different
trades to pay their workmen in money and not
in goods, is quite juft- and equitable. It im-
pofes no real hardfliip upon the mafters. It only
obliges them to pay that value in money, which
they pretended to pay, but did not always really
pay, in goods. This law is in favour of the work-
men ; but the 8th of George III. is in favour of
the mafters. When mafters combine together in
order to reduce the wages of their workmen, they
commonly enter into a priyate bond or agreement,
not to give more than a certain wage under a
certain penalty. Were the workmen to enter
into a contrary combination o( the fame kind,
not to accept of a certain wage under a certain
penalty, the law would punifli them very fevere-
ly;. and if it dedt impartially, it would treat the
mafters in the fame manner. But the 8th of
George III. enforces by law that very regulation
which mafters fometimes attempt to eftablifh by
fuch combinations. The complaint of the work-
men, that it puts the^ableft and moft induftrioug
upon the fame footing with an ordinary workman,
feems perfedkly well founded.

In ancient times too it was ufual to attenript
to regulate the profits of merchants and other
dealers, by rating the price both of provifions
and other goods. The affize of bread is, fo far
as I know, the only remnant of this ancient

ufage.

Z2Z

THE NATURE AND CAUSES OF

tifage. Where there is an exclufive corporatipn^
it may perhaps be proper to regulate the price of
the firft ncceflary of life. But where there is noncj
the competition will r^;ulate it jnuch better than
any affize. The method of fixing the affize of
bread eftablifhed by the 31ft of George II. could
not be put in pra£tice in Scodand^ on account of
a defeft in the law ; its execution depending upon
the office of clerk of the market, which does not
exift there. This dcfeft was not remedied till the
3d of George III. The want of an affize oc-
calioned no fenfible inconveniency, and the efta-
blifhment of one in the few places where it has yet
taken place, has produced no fenfible advantage.
In the greater part of the towns of Scodand, how-
ever, thece is an incorporation of bakers who
claim exclufive privileges, though they ^ are not
very ftriftly guarded.

The proportion between the different rates both
of wages and profit in the different employments
of labour and (lock, feems not to be much affeded,
as has already been obierved^ by the riches or
poverty, the advancing, ftationary, or declining
ftate of the fociety. Such revolutions in the pub-
lic welfare, though they affeft the general rates
both of wages and profit, mufl in the end affeA
them equally in all different employments* The
proportion between them, therejfore, muft remain
the fame, and cannot well be altered, 4tt leaft for
. any confiderable time> by any fuch revolutions^

THE WEALTH OF NATIONS. 2zs

CHAP. XL

Of th^ Rent of Land.

RE N T^ confidcrcd as the price paid for the c h a p.
ufe of land, is naturally the higheft which
the tenant can afibrd to pay in the a£tual cir-
cumftances of the land. In adjufling the terms
of the Icafe, the landlord endeavours to leave
him no greater Iharc of the produce than what is
fufikient to keep up the ftock from which he
iurniihes the feed, pays the labour, and purchafea
wd maintains the catde and other inftrunnents
of hufbandry, tog^her with the ordinary profit*
of farming flock in the neighbourhood. This i$
evidently the fmallcft fliare with which the tenant
can content himfelf without being a lofer, and
the landlord feldom means to kave him any
more. Whatever part of the produce, or, what
is the fame thing, whatever part of its price, is
over and above this Ihare, he naturally endea-
vours to refcrve to himfelf as the rent of his
land, which is evidently the highefl: the tenant
can afford to pay in the aftual circumftances of
the land. Sometinr^s, indeed, the liberality,
more . frequently the ignorance, of the landlord,
makes him accept of (bmewhat lefs than this por-
tion; and ibmetimes too, though more rarely,
the ignorance of the tenant makes him undertake
to pay ibmewhat more, or to content himfelf
ifHth Ibmewliat lefs, than the ordinary profits of
fiurming ftock in the neighbourhood. This portion,

however.

»4 tH8 UATURE AND CAUSES <3F

B o o 1& however, may ftill be confidered as the natural r€ht
of land, or the rent for \irhich it is naturally meant
that land fhould for the moft part be let.

The rent of land, it may b« thought, is fre-
quently no more than a reafpnable profit or in-
tereft for the ftock laid out by the landlord upon
its improvement. This, no doubt, may be paitly
the cafe upon fome occafions; for it can fcarcc
ever be more than partly the cafe. The land-
lord demands a rent even for unimproved land^
and the .fuppofed intei^eft or profit upon the ex-*
pence of improvement is generally an addition to
this original rent. Thofe improvements^ befides^
are not always made by the ftock of the landlord^
but fomctimes by that ,of the tenant. When the
kafe comes to be renewed, however, the landlord
commonly demands the fame augmentation of ren^
as if they had been all made by his own.
. He fometimes demands rent for what is alto-
gether incapable of human improvement. Kelp is
a fpecies of fea-wced, which, when burnt, yields^ an
alkaline fait, ufeful for making glafs, ibap, and
for fcveral other purpofes. It grows in feveral
parts of Great Britain, particularly in Scodand^
upon fuch rocks only as lie within the high water
mark, which are twice every day covered with the
fea, and of which the produce, therefore, was
never augmented by human induftry. The land-*
lord, however, whofe eftate is bounded by a kelp
ihore of this kind, demands a rent for it as much
as for his corn fields.

The iea in the neighbourhood of the klands
pf Shedand is more than commonly abundant in

filh^

THE WEALTH OF NATIONS. 215

filh, which make a great part of the fubfiftence chap,
of their inhabitants. But in order to profit by
the produce of the water, they niuft have a habi-
tation upon the neighbouring land. ' The rent
of the landlord is in proportion, not to what the.
farmer can make by the land, but to what he can
make both by the land and by the water. It is
partly paid in fea-fifh; and one of the very few
inftahces in which rent makes a part of the price
of that commodity, is to be found in that
country.

The rent of land, therefore, confidered as the
price paid for the ufe of the land, is naturally a
monopoly price. It is not at all proportioned
to what the landlord may have laid out upon the
improvement of the land, or to what he can af-
ford to take ; but to what the farmer can afford
to give.

Such parts only of the produce of land can
commonly be brought to market of which the
ordinary price is fufEcient to replace the ftock
which muft be employed in bringing them
thither, together with its ordinary profits. If the
ordinary price is more than this, the furplus part
of it will naturally go to the rent of the land.
If it is not more, though the commodity may be
brought to market, it can afford no rent to the
landlord. Whether the price is, or is not more,
depends upon the demand.

There are fome parts of the produce of land
for which the demand muft always be fuch as to
afford a greater price than what is fufficient to
bring them to market; and there are others for

Vol. I. Q^ which

226 THE NATURE AND CAUSES OF

BOOK which it either may or may not be fuch as to af-
ford this greater price. The former muft always
aSbrd a rent to the landlord. The latter fome-
times may^ and fometinKS may not, according to
different circumilances.

Rent, it is to >be obiervedj therefore, enters
into the compolition of the price of commodi-
ties in a different way from wages and profit.
High or low wages and profit, are the caufes €}f
high or low price ; high or low rent is the effedt
of it. It is becaufe high or low wages and profit
muft be paid, in order to bring a particular com-
modity to market, that its price is high or low.
But it is becaufe its price is high or low; a great
deal more, or very little more, or no more, than
what is fufficient to pay thofe wages and profit,
that it affords a high rent, or a low rent, or no
rent at all.

The particular confideration, firft, of thofe
parts of the produce of land which always afibrd
fome rent ; fecondly, of thofe which fometimes
may and fometimes may not afibrd rent ; and,
thirdly, of the variations which, in the difl^rent
periods of improvement, naturally take place, in
the relative value of thofe two different forts ; of
rude produce, when compared both with one an-
other and with manufa£tured commpditieSj * wiU
divide this chapter into three parts.

THE WEALTH OF NATIONS. 227

PART I.

Of tbe^ Produce of Land which always affords Rent.-

A S men, like all other animals, naturally mul-
tiply in proportion to the means of their
fubfiftence, food is always, more or lefs, in de-
mand. It can always purchafe or command a
greater or fmaller quantity of labour, and fome-
body can always be found who is willing to do
fomething in order to obtain it. The quantity
of labour, indeed, which it can purchafe, is not
always equal to what it could maintain, if ma-
naged in the moft , oeconomical manner, on ac-
count of the high wages which are fometimes
given to labour. But it can always purchafe fuch
a quantity of labour as it can naaintain, accordA
ing to the rate at which that fort of labour is com-
monly maintained in the neighbourhood.

But land, in almoft any fituation, produces a
greater quantity of food than what is fufficient to
maintain all the labour neceflary for bringing it
to market, in the moft liberal way in which that
labour is ever maintained. The furplus too is
always more than fufficient to replace the flock
vwhich employed that labour, together with its
profits. Something, therefore, always remains
for a rent to the landlord.

The moft defart moors in Norway and Scot-
land produce fome fort of paflure for cattle, of
^which the milk and the increafc are always more

0^2 than

228 THE NATURE AND CAUSES OF

BOOK than fufficient, not only to maintain all the la-
bour neceflary for tending them, and to pay the
ordinary profit to the farmer or^ owner of the
herd or flodk; but to afford fome fmall rent to
the landlord. The rent increafes in proportion
to the goodnefs of the pafture. The fame ex-
tent of ground not only maintains a greater
number of cattle, but as they are brought within
a fmaller compafs, lefs labour beconies requifite
to tend them, and to colleft their produce. The
landlord gains both ways ; by the increafe of the
produce, and by the diminution of the labour
which miift be maintained out of it.

/The rent of land not only varies with its fer-
tility, whatever be its produce, but with its fitu-
ation, whatever be its fertility. Land in the
neighbourhood of a town gives a greater rent
than land equally fertile in a diftant part of the
Country. Though it may coft no more labour
to cultivate the one than the other, it mull al-
ways coft more to bring the produce of the dif-
tant land to market. A greater quantity of la-
bour, therefore, muft be maintained out of it ;
and the furplus, from which are drawn both the
profit of the farmer and the rent of »the landlord,
muft be diminifhed. But in remote parts of the
country the rate of profits, as has already been
fhown, is generally higher than in the neighbour-
hood of a large town. A fmaller proportion of
this diminifhed furplus, therefore, muft belong to
the landlord.

Good roads, canals, and navigable rivers, by
diminilhing the expence of carriage, put the re-
mote

THE WEALTH OF NATIONS. 229

mote parts of the country more nearly upon a c h a p.^
level with thofe in the neighbourhood of> the
town. They are upon that account the greatefl:
of all improvennents. They encourage the cul-
tivation of the remote, which muft always be the
moff extenfive circle of the country. They are
advantageous to the town, by breaking down the
monopoly of the country in its neighbourhood.
They are advantageous even to that part of the
country. Though they introduce fome rival
commodities * into, the old^ market, they open
many new markets to its produce. Monopoly,
befides, is a great enemy to good management^
which can never be univerfally eftabliflied but in
confequence of that free and univerfal competi-
tion which forces every body to have recourfe to
it for the fake of felf- defence. It is not more
than fifty years ago, that fome of the counties in
the neighbourhood of London petitioned the
parliament againft the extenfion of the turnpike
roads into the remoter counties. Thofe remoter
counties, they pretended, from the cheapnefs of
labour, would be able to fell their grafs and
corn cheaper in the London market than them-
fclves, and would thereby reduce their rents, and
ruin their cultivation. Their rents, however, have
f ifen, and their cultivation has been improved fince
that time.

A CORN field of moderate fertility produces a
much greater quantity of food for man, than the
beft pafture of equal extent. Though its culti-
vation requires much more labour, yet the fuf-
plus which remains after replacing the feed and

Q^3 maintaining

*30

THE NATURE AND CAUSES OF

o o K mdntaining all that labour, is likewife much
greater. If a pound of butchcr's-meat, there-
fore, was never fuppofed to be worth more than
a pound of bread, this greater (lirplus would
every- where be of greater value, and conftitute
a greater fiind both for the profit of the farmer
and the rent of the landlord. It feems to have
done fo univerfally in the rude beginnings of agri-
culture.

But the relative values of thofe two different
fpecies of food, bread, and butcher's-meat, are
Very different in the different periods of agricul-
ture. In its rude beginnings, tlje unimproved
wilds, which then occupy the far greater part
of the country, are all abandoned to catde.
There is more butcher's- meat than bread, and
bread, therefore, is the food for which there is
the greateft competition, and which confequently
brings the greateft price. At Buenos Ayres, we
are told by UUoa, four reals, one-and-twenty
pence halfpenny fterling, was, forty or fifty years
ago, the ordinary price of an ox, chofen fi*om a
herd of two or three hundred. He fays nothing
of the price of bread, probably becaufe he found
nothing remarkable about it. An ox there, he
fays, cofts little more than the labour of catching
him. But corn can no-where be raifed without
a great deal of labour, and in a country which
lies upon the river Plate, at that time the diredt
road from Europe to the filver mines of Potofi,
the money price of labour could not be very
.cheap. It is otherwife when cultivation is ex-
tended over the greater part of the country.

THE WEALTH OF NATIONS. 231

There is then more bread than butcher's- meat. ^\^ ^*
The competition changes its diredion, and the
price of butcher's-meat becomes greater than the
price of bread.

By the extenfion befides of cultivation, the
unimproved wilds become infufficient to fupply
the demand for butcher's-meat. A great part
of the cultivated lands muft be employed in
rearing and fattening cattle, of which the price,
therefore, muft be liifiicient to pay, not only the
labour neceflary for tending them, but the rent
which the landlord and the profit which the
farmer could have drawn from fuch land em-
ployed in tillage. The cattle bred upon the
moft uncultivated moors, when brought to the
fame market, are, in proportion to their weight
or goodnefs, fold at the fame price as thofe
which are reared upon the moft improved land.
The proprietors of thofe moors profit by it, and
raife the rent of their land in proportion to the
price of Cheir cattle. It is not more than a cen-
tury ago that in many parts of the highlands of
Scotland, butcher's- meat was as cheap or
cheaper than even bread made of oat-meaL The
union opened the market of England to the
highland catde. Their ordinary price is at pre-
fent about three times greater than at the begin-
ning of the century, and the rents of many high-
land eftates have been tripled and quadrupled in
the fame time. In almoft every part of Great
Britain a pound of the beft butcher's -meat is, in
the pr-efent times, generally worth more than
two pounds of the beft white bread s and in

0^4 plentiful

232 THE NATURE AND CAUSES OF

BOOK plentiful years it is. fome times worth three or four
pounds.

It is thus that in the progrefs of improvement
the rent and profit of unimproved pafture come
to be regulated in fome meafurei by the rent and
profit of what is improved, and thefe again by
the rent and profit of corn. Corn is an annual
crop. Butcher's-meat, a crop which requires
four or five years to grow. As an acre of land,
therefore, will produce a much fmaller quantity
of the one Ipecies of food than of the other, the
inferiority of the cjuantity muft be compenfated
by the fuperiority of the price. If it was more
than compenfated, more corn land would be
turned into pafture ; and if it was not compen-
fated, part of what was in pafture would be
brought back into corn.

This equality, however, between the rent and
profit of grafs and thofe of corn; of the land of
which the immediate produce is food for cattle,
and of that of which the immediate produce is
food for men ; muft be underftood to take place
only through the greater part of the improved
lands of a great country. In forhe particular lo^
cal fituations it is quite otherwife, and the rent
and profit of grafs are much fuperior to what can
be made by corn.

Thus in the neighbourhood of a great town,
the demand for milk and for forage to horfcs,
frequently contribute, together with the high
price of butcher's-meat, to raife the value of
grafs above what may be called its natural pro-
portion to that of corn. This local advantage,

THE WEALTH OF NATIONS. 233

it is evident, cannot be communicated to the lands chap.
at a diftance.

Particular circumftances have fometimes
rendered fome countries fo populous, that the
whole territory, like the lands in the neighbour-
hood of a great town, has not been fufficient to
produce both the grafs and the corn neceffary
for the fubfiftence of their inhabitants. Their
lands, therefore, have been principally employed
in the produftion of grafs, the more bulky com-
modity,, and which cannot be fo eafily brought
from a great diftance ; and corn, the food of the
great body of the people, has been chiefly im7
ported from foreign countries. Holland is at
prefent io this fituation, and a confiderable part
of ancient Italy feems to have been fo during
the profperity of the Romans. To feed well,
old Cato faid, as we are told by Cicero, was the
firft and moft profitable thing in the manage-
.ment. of a private cftate; to feed tolerably well,
the fecondi* and to feed ill, the third. To
plough, he ranked only in the fourth place of
profit and advantage. Tillage, indeed, in that
part of ancient Italy which lay in the neighbour-
hood of Rome, muft have been very much dif-
couraged by the diftributions of corn which were
frequently made to the people, either gratui-
toufly, or at a very low price. This corn was
brought from the conquered provinces, of which
feveral, inftead of taxes, , were obliged to furnifli
a tenth part of their produce at a ftated price,
about fixpence a peck, to the republic, v The
low price at which this corn was diftributed to

9 - ' the

234 'I'HE NATURE AND CAUSES OF

BOOK die pcoficy muft ncccflarily have Aink the price o(
what could be brought to the R(»nan market from
Latium, or the ancient territory of Rome^ and
muft have difcouragcd its cultivation in that
country.

In an open country too^ of which the princi-
pal produce is corn^ a well-encloled piece of
grais will fiequendy rent higher than any corn
field in its neighbourhood. It is convenient for
die maintenance of <he catde employed in the
culdvadon of the com, and its high rent is, in
this cafe, not fb properly paid from the value of
its own produce, as from that of the com lands
which are cultivated by means of it. It is likely
to &11, if ever die neighbouring lands are com-
pletely enclofed. The prefent high rent of en-
clofed land in Scotland feems owing to the
fcarcity of cnclofiire, and will probably laft no
longer than that fcarcity. The advantage of cn-
clofiire is greater for pafhire than for com. It
laves the labour of guarding die catde, which feed
better too when they are not liable to be difhirbcd

. by their keeper or his dog.

But where there is no local advantage of this
kind, the rent and profit of corn, or whatever elfe
is the common vegetable food of the people,

'. muft naturally regulate, upon the land which
is fit for producing it, the rent and prc^t of

. pafture.

The ufe of the artificial grafTes, of turnips,
carrots, cabbages, and the other expedients
which have been fallen upon to make an equal
quantity of land feed a greater number of catde

than

.ft m^m^tM

THE WEALTH OF NATIONS. tjj

than when in natural grafs, fliould fomewhat c h a f,
reduce, it might be expefted, the fuperiority
which, in an improved country, the price of
butcher's-meat naturally has over that of bread.
It feems accordingly to have done fo; and
there is fome realbn for believing that, at
Icaft in the London market, the price of
butcher's-meat in proportion to the price c£
bread, is a good deal lower in the prefent
times than it was in the beginning of the laft
century.

In the appendix to the Life of prince Jlenry,
Doftor Birch has given us an account of the
prices of butcher's-meat as commonly paid by
that princer It is there faid, that the four quar-
ters of an ox weighing fix hundred pounds
ufually coft him nine pourids ten fliillings, or
thereabouts ; that is, thirty-one Ihillings and
eight pence per hundred pounds weight. Prince
Henry died on the 6th of November i6j2, in
the nineteenth year of his age.

In March 1764, there was a parliamentary
inquiry into the caufes of the high price of pro-
vifions at that time. It was then, among other
proof to the fame purpofe, given in evidence by a
Virginia merchant, that in March 1763, he had
viftualled his fhips for twenty-four or twenty-
five fhillings the hundred weight of beefi which
he confidered as the ordinary pri^e; whereas, in
that dear year, he had paid twenty-feven fhillings
for the fame weight and fort. This high price
in 1764 is, however, four fhillings and eight-
pence cheaper than the ordinary price paid by

prince

ajfi THE NATURE AND CAUSES OF

BOOK prince Henry j and it is the beft beef only, it muft
-*- . be obferved, which is fit to be falted for thofe
diftant voyages.

The price paid by prince Henry amounts to
34^' per pound weight of the whole carcafe, coarfe
and choice pieces taken together j and at that rate
the choice pieces could not have been fold by re-
tail for lefs than 4|</. or 5^. the pound.

In the parliamentary in<^uiry in 1764, the wit-
neffes ftated the price of the cI;ioice pieces of
the beft beef to be to the confumer 4//. and 4J^.
the pound; and the coarfe pieces in general to
be from feven farthings to a^d. and 2id.; and this
they faid was in general one half-penny dearer than
the fame fort of pieces had ufually been fold in the
month of March. But even this high price is ftill
a good deal cheaper than what we can well lup-
pofe the ordinary retail price to have been in the
time of prince Henry.

During the twelve firft years of the laft cen-
tury, the average price of the beft wheat at the
Windfor market was i/. lis. 3^^. the quarter of
nine Winchefter bufhels.

But in the twelve years preceding 1764, in-
cluding that year, the average price of the fame
meafure of the beft wheat at the fame market was
2/. IS. gld.

I N the twejve firft years of the laft century,
therefore, wheat appears to have been a good deal
cheaper, and butcher*s-meat a good deal dearer,
than in the twelve years preceding 1764, including
that year.

THE WEALTH OF NATIONS. «37

In all great countries the greater part of the c h a p.
Gultivated lands are employed in producing either
food for men or food for cattle. The rent and,
profit of thefe regulate the rent and profit of all
other cultivated land. If any particular produce
afforded lefs, the land would foon be turned into
corn or pafture ; and if any afibrded more, fomc ^
part of the lands in corn or pafture would foon be
turned to that produce.

Those produftions, indeed, which require either
a greater original expence of improvement, or a
greater annual expence of cultivation, in order to
fit the land for them, appear commonly to afford,
the one a greater rent, the other a greater profit
than corn or paflure. This fuperiority, however,
will feldom be found to amount to mor^ than a
reafonable intereft or compenfation for this fuperior
expence.

In a hop garden, a fruit garden, a kitchen
garden, both the rent of the landlord, and the
profit of the farmer, are generally greater than in
a corn or grafs field. But to bring the ground
into this condition requires more expence.
Hence a greater rent becomes due to the land-
lord. It requires too a more attentive and Ikil-
fill management. Hence a greater profit be-
comes due to the farmer. The crop too, at leaft
in the hop, and fruit garden, is more precarious.
Its price, therefore, befides compenfating all oc-
cafional lolTes, niuft afibrd fomething like the
profit of infurance. The circumftances of gar-
deners, generally mean, and always moderate^
T^ay latisfy us that their great ingenuity is not

commonly

THE NATURE AND CAUSES OF

BOOK commonly ovcr-rccompcnccd. Their delightful
> J ■ art is praftifed by fo many rich people for amufe-
ment> that little advantage is to be made by thofe
who prafkife it for profit; becauie the perfons
who Ihould naturally be their beft cuftomers,
fupply themfelves with all their moft precious pro-
dudtions.

The advantage which the landlord derives
from fuch improvements feems at no time to
have been greater than what was fufficient to
compenfate the original expence of making
them. In the ancient husbandry, after the vine-
yard, a well-watered kitchen garden feems to
have been the part of the farm which was fup-
pofed to yield the moft valuable produce. But
Denrtocritus, who wrote upon huft)andry about
two thoufahd years ago, and who was regarded
by the ancients as one of the fathers of the art^
thought they did not aft wifely who enclofcd a
kitchen garden. The profit, he faid, would not
compenfate. the expence of a ftone wall; and
bricks (he meant, I fuppofe, bricks baked in the
fun) mouldered with the rain, and the winter
florm, 'and required continual repairs. Colu-
mella, who reports this judgment of Democritus^
does not contrpvert it, but propofes a very
frugal method of enclofing with a hedge of
brambles and briars, which, he fliys, he had
found by experience to be both a lafting and an
impenetrable fence ; but which, it leems, was
not commonly known in the time of Democri-
tus. Palladius adopts the opinion of Colu-
mella, which had before been recommended by

Varro.

THE WEALTH OF NATIONS.. 239

Varro. In the judgment of thofe ancient im- chap.
provers, the produce of a kitchen garden had, it
feems, been litde more than fufficient to pay the
extraordinary culture and the expence of water-
ing; for in countries fo near the fun, it was
thought proper, in thofe times as in the prefejit,
to have the command of a ftream of water, which
could be conduced to every bed in the garden,
, Through the greater part of Europe, a kitchen
garden is not at prefent fuppofed to dpferve a
better enclofure than that recommended by Cor
lumella. In Great Britain, and fbme other
northern countries, the finer fruits cannot be
brought to perfeftion but by the afliftance of a
wall. Their price, therefore, in fuch countries
rriuft be fufficient to pay the expence of building
and maintaining what they cannot be had with-
out. The fruit-wall frequently furrounds the
kitchen garden, which thus enjoys the benefit of
an enclofure which its own produce could fcldbm
pay for.

That the vineyard, when properly planted
and brought to perfeftion, was the moft valuable
part of the farm, feems to have been an un-
doubted maxim in the anckfnt agriculture, as it
is in the modern through all the wine countries-
But whether it was advantageous to plant a new
vineyar4> was a . matter of difpute among the
ancient Italian hufbandmen, as we learn from
Columella. He decides, like a true lover of all
curious cultivation, in favour of the vineyard,
and endeavours to fhow, by a comparilon of the
profit aild expence^ that it was a moll: advan-
tageous

240 THE NATURE AND CAUSES OF

BOOK tageous improvement. Such comparifons, how-
ever, between the profit and expence of new
projefts, are- commonly very fallacious; and in
nothing more fo than in agriculture. Had the
gain actually made by fuch plantations been
commonly as great as he imagined it might have
been, there could have been no difpate about it.
The Tame point is frequently at this day a mat-
ter of controverfy in the wine countries. Their
writers on agriculture, indeed, the lovers • and
promoters of high cultivation, feem generally
difpofed to decide with Columella in favour of
the vineyard. In France the anxiety of the pro-
prietors of the old vineyards to prevent the
planting of any new ones, feems to favour their
opinion, and to indicate a confcioufnefs in thofe
who muft have the experience, that this ipecies
of cultivation is at prefent in that country more
profitable than any other. It feems at the fame
time, however, to indicate another opinion, that
this fuperior profit can laf^ no longer than the
laws which at prefent reftraih the free culti-
vation of the vine. In 173 1, they obtained an
order of council, prohibiting both the planting
of new vineyards, and the renewal of thofe old
ones, of which the cultivation had been inter-
rupted for two years, without a particular per-
miflion from the king, to be granted only in
confequence of an information from the intend-
ant of the province, certifying that he had ex-
amined the land, and that it was incapable of
any other culture. The pretence of this order
was, the fcarcity of corn and pafture> and the
' fuper-

fuper-abundance of wine. But had this foper- crap.
abundance been real, it would, without any ^'*
order of council, have 6fFe6tually prevented the
plantation of new vineyards, by reducing the
profits of this fpecies of cultivation below their
natural proportion to thofe of Corn and pafture*
With regard to the fuppofed fcarcity of corn oc-
cafioned by the multiplication of vineyards, corn
is nowhere in France more carefully cultivated
than in the wine provinces, where the land is fit
for producing it ; as in Burgundy, Guienne, and
the Upper Languedoc. The numerous hands
employed in the one fpecies of cultivation necef-
farily encourage the other, by affording a ready
market for its produce. To diminifh the num-
ber of thofe who are capable of paying for it, is
furely a moft unpromifing expedient for encou-
raging the cultivation of corn. It is like the
policy which would promote agriculture by dif-i
couraging manufactures.

The rent and profit of thofe produftiOnS/
therefore, which require either a greater original
cxpence of improvement in order to fit the land
for them, or a greater annual expence of culti-
vation, though often much fuperior to thofe of
corn and pafture, yet when they do no more than
Compenfate fuch extraordinary expence, are in^
reality regulated by the rent and profit of thofe
common crops.

It fometinrtcs happens, indeed, that the quan-
tity of land which can be fitted for fome parti-
cular produce, is too fmall to fupply the cffeftual
demand. The whole produce can be difppfcd

Vol. L R of

S49 THE NATURE AND CAUSES OP

B o a K of to thofe who are willing to give fomewhat
more than what is fufficient to pay the whole
rent) wages and profit neceflary for raifing and
bifo^ng it to nnarket> according to their natural
rates^ or according to the rates at which they are
paid in the greater part of other cultivated land.
The furplus part of the price which remains after
defraying tjic whole expence of improvement
and cultivation may commonly, in this cafe> and
in this cafe only> bear no regular proportion to
the like furplus in corn or pafture, but may ex^
eeed it in almoft any degree ; and the greater part
of this excefs naturally goes to the rent of the
landlord.

The uflial and natural proportion, for example^
between the rent and profit of wine and thofe of
corn and paflure, muft be underftood to take place
only with regard to thofe vineyards which produce
nothing but good common wine> fuch as can be
raifed almoft any- where, upon any light, gravelly,
or fandy foil, and which has nothing to recom-
mend it but its ftrength and wholefemenefs. It is
with fuch vineyards only that the common land of
the country can be brought into competition ; for
with thofe of a peculiar quality it is evident that it
cannot.

The vine is more affeded by the difference of
foils than any other fruit tree. From fomc it
derives a flavour which no culture or manage-
ment can equal, it is fuppofed, upon any other«
This flavour, real or imaginary, is fi»netimes
peculiar to the produce of a few vineyards 5
fometimes it extends through the greaiter part of

a finall

THE Wealth of nations. * 141

i Ima}! diftrift, and fctttietimes through a con^^ c. h a p*
fiderabla part of a lajpgc provmcc. The yii^Qh
quantity of fuch wines that i$ brought to nttarket
f^Us fiiprt of the elFeftual demand, or the de-<
inand of thofe who would be wiUing to pay the
whole rent, profit and wages neccfiary for pre-
paring and bringing them thither, according to
the orcHnary rate, or according to the rate ^c
which they are paid in common vineyards. Th«
whcA? quantity, therefore, can be difpofed of to
thofe who are willing to pay more, which necef-
larily raifes the price above that of xommon wine.
The difference is greater or lefs, according as
the fafhionablencfs and fcarcity of the wine rcn-^
. der the competition of the buyers more or lefs
eager. Whatever it be, the greater part of it
goes to the rent of the landlord. For though
fuch vineyards arc in general more carefully cul-n
tivated than m<A others, the high price erf" the
wine fecms to be, not fb much the effeft, as the
caufe of this qareful cultivation* In fo valuable
a produce the lofs occafioned by negligence is fp
great as to force even the moft carelefs to atten-
tion. A fmall part of this high price, therefore,
is fufficient to pay the wages of the extraordinary
labour beftowed upon their cultivation, and the
profits of the extraordinary flock which puts that
labour into motion.

The fugar colonies pofTefTed by the European
nations in the Wefl Indies, may be compared to
thofe precious vineyards. Their whole produce
falls fhoFt of the eflfeftuol demand of Europe, and
can be difpofed of to thofe who are willing to

I^ 2 give

«44

THE NATURE AND CAUSES Ot

B o o It give more than what is fufficient to pay tht
wh^e rent, profit and wages neceflary for pre-
paring and bringing it to market^ according to
the rate at which they arc commonly paid by
any other produce. In Cochin-china the fineft
white fugar commonly fells for three piaftres the
quintal, about thirteen ihillings and iixpence of
pur nioney, as we are told by Mr. Poivre*, a
very careful obferver of the agriculture of that
country. What is there called the quintal weighs
from a hundred and fifty to two hundred Paris
pounds, or a hundred and feventy-five Paris
pounds at a medium, which reduces the price of
the hundred weight Englifh to about eight ihillings
ilerling, not a fourth part of what is commonly
paid for the brown or muikavada fugars imported
from our colonies, and not a fixth part of what
is paid for the fineft white fugar. The greater
part of the cultivated lands in Cochin-china are
employed in producing corn and rice, the food
of the great body of the people. The re-
^eftivc prices of corn, rice, and fugar, are there
probably in the natural proportion, or in that
which naturally t?.kes place in the different crops
of the greater part of cultivated land, and whicl^
rccompences the landlord and farmer, as nearly
as can be computed, according to what is ufually
the original expence of improvement and the.
annual expence of cultivation. But in our fugar
colonies the price of fugar bears no fuch propor-
tion to that of the produce of a rice or corn field
cither in Europe or in America, It is commonly

• Voyages d*un Philofophe«

Iaid>

THE WEALTH OF NATIONS.

•245

faid, that a fugar planter expefts that the rum c m a f.
and the molafles fliould defray the whole ex-
pence of his cultivation, and that his fugar
(hould be all clear profit. If this be true, for I
pretend not to affirm it, it is as if a com farmer
expefted to defray the expence of his cultivation
with the, chaff and the ftraw, and that the grain
(hould be all clear profit. We fee frequendy
focieties of merchants in London and other trad-
ing towns,, purchafe wafte lands in our fugar
colonies, which they exped to improve and cul^
tivate with profit by means of faftors and agents s
notwithftanding the great diftance and the ua*-
certain returns, from the defeftive adminiftration
of juftice in thofe countries. Nobody wilj attempt
to improve and cultivate in the fame manner
the moft fertile lands of Scotland, Ireland, or
the corn provinces of North America, though
from the more exaft adminiftration of juftice in
thefc countries, more regular returns might be
cxpefted.

In Virginia and Maryland the cultivation of
tobacco is preferred, as more profitable, to that
of corn. Tobacco might be cultivated with
advantage through the greater part of Europe -,
but in almoft every part of Europe it has become
a principal fubjedt of taxation, and to colleft a
tax from every different farm in the country
where this plant might happen to be cultivated,
would be more difficult, it has been fuppofed,
than to levy one upon its importation at the
cuftom-houfe. The cultivation of tobacco has
ypon this accotint been moft abfurdly prohibite4

R ^ through

C4< THK NATURE AND CAUSES OP

BOOK through the grc^ftter part of Euri^, which netef-
'* farily gives a fort of monopoly to the countries
^here it is allowed i and as Virginia ami Mary-
land produce the grcatcft quantity of it, they
ihare largely, though with foitic competitors in
the advantage of this monopcdy. The cukivaT
cion of tobacco, however, feems not to be ib ad-
vantageous as that of fugar. I have never even
heard of any tobacco plantation that wa& im-
proved and cultivated by the capital pf merchants
who refided in Great Britain, and our tobacop
colonies fend us home no fuch weakhy pkntsns
«s we (ee frequendy arrive from pur fugar iflands.
Though from the preferenoe given in thofe co-
lonies to the cultivation of tobacco above di«t of
corn, it would appear that die efiefhsal demand
of Europe for toba<!:co is not completely ftip-
plied, it probably is more nearly fo than that fee
fugar: And though the prefent price of tx>bacco
is probably more than fufficient to pay the wbok
rent, wages and profit neceflary for preparing
and bringing it to market, according to the rate
at which they are commonlj^ paid in corn la«d 5
iit muft not be fo miKh more as the prefent price
of fugar. Our tobacco planters, accoixiingly,
have Ihewn the fame fear of the fuper^abundanoe
of tobacco, which the proprietors tof the oW
vineyards in France have of the fuper-^bundance
of wine. By aft of aflembly they have reftrained
its cultivation to fix thoufand plants, fuppofed
to yield at thoufand weight of tobacco, for evesy
neg;ro between fixteen and fixty years of Ige.
Such a negro, over and above this quantity of

tobacco.

THE WEALTH OF NATIONS. 147

lobftcco, can manag^) thejr reckon, four acres of c h a p.
Indian corn. To prevent the market from being '
oveiitocked too, they have fometimej, in plentiful
years, we arie told by Dr, Douglas*, (I fufpeft he
has been ill informed) burnt a certain quantity of
tobacco for every negro, in the fame manner as
the Dutch are faid to do of fpiccs. If fuch violent
methods are neceflary to keep up the prefent price
of tobacco, the fuperior advantage of its culture
over diat of corn, if it ftill has any, will not pro-
bably be of long continuance*

It is in this mainer that the rent of the culti-
vated land, of which the produce is Jiuman food,
regulates the rent of the greater part of other
cultivated land. No particular produce can
long afford lefs ; becaufe the land would imme-
diately be turned to anodier uie: And if any
particulb pcxxluce commonly afibrds more, it is
becaufe the quantity of land which can be fitted
for it is too fmall to fupply the efFedtual de-
mand.

In Europe corn is the principal produce of
land which ferves imn^ediately for human food.
Except in particular fituations, therefore, the rent
c^ corn land regulates in Europe that of all other
cultivated land* Britain need envy neither the
vineyards of France nof the olive plantations of
Italy. Except in particular fituations, the value
of thefc is regulated by that of corn, in which the
fertility of Britain is not much inferior to that of
either of thofe two countries,

\ * Douglas's Summary, vol. ii. p. 372, 373^

R4 If

S4S THE Nature and causes op

If in any country the common and iavotirito
vegetable food of the people fliould be drawn
from a plant of which the moft common land,
with the fame or nearly the fame culture, pro-
duced a much greater quantity thaa the moil
fertile does of corn, the rent of the landlord, or
the furplus quantity of food which would remain
to him, after paying the labour and replacing
the flock of the farmer together with its ordi-
nary profits, would neceflarily be mych greater.
Whatever was the rate at which labour was com-
monly maintained in that country, this greater
furplus could always maintain a greater quantity
of it, and confequently enable the landlord to
purchafe or command a greater quantity of it.
The real value of his rent, his real power and
authority, his command of the neceflaries and con-
veniencies of life with which the labour of other
people could fupply him, would neceflarily be
much greater.

A RICE field produces a much greater quan*
tity of food than the moft fertile corn field.
Two crops in the year from thirty to fucty bufhels
each, are faid to be the ordinary produce of an
acre. Though its cultivation, therefore, re-
quires more labour, a much greater furplus re-
mains after maintaining all that labour* In
thofe rice countries, therefore, where rice is the
common and favourite vegetable food of the
people, and where the cultivators are chiefly
maintained with it, a greater fhare of this greater
furplus ihould belong to the landlord than
in corn countries. In Carolina, where the

*' S'. -i — •• • \ ■ . ^

plaiitcrs^

THE WEALTH OP NATIONS. t^9

planters, as in other Britifli colonies, are gene- g h a p.
rally both farmers and landlords, and where rent
confequently is confounded with profit, the cuU
tivation of rice is found to be more profitable
than that of corn, though their fields produce^
only one crop in the year, anid though, from the
prevalence of the cuftoms of Europe, rice is not
there the common and favourite vegetable food
of the people.

A GOOD rice field is a bog at all^feafons, and
at one feafon a bog covered with water. Jfi is
unfit either for corn, or pafture, or vineyard,* or^
indeed, for any other vegetable produce that h
very ufeful to men: And the lands which are fit
for thofe purpofes, are not fit for rice. Even inj
the rice countries, therefore, the rent of ricc
lands cannot regulate the rent of the other culti-
vated land which can never be turned to that'
produce.

The food produced by a field of potatoes is
not inferior in quantity to that produced by a
field of rice, and much fupcrior to what is pro-
duced by a field of wheat. Twelve thpufahd
weight of potatoes from an acre of land is not a
greater produce than two thoufand weight of
wheal. The food or folid nourifhment, indeed^
which can be drawn from each of thofe two
plants, is not altogether in proportion to their
weight, on account of the watery nature of po-
tatoes. Allowing, however, half the weight of
this root to go to water, a very large aUowance»
fuch an adre of potatoes will ftili produce fix
(houfarid weight of folid nouriihoieot^ three

times

mo THE NATURE AND CAUSIS OF

BOOK times the quantity produced by the acre of
wheat. An acre of potatoes is cultivated with
lefs expence than an acre of wheat s the fallowj
which generally precedes the fowing of wheat>
more than compenfating the hoeing and other
extraordinary culture which is always given to
potatoes. Should thia root ever become in any
part of Europe, like rice in fpme rice countries^
the common and favourite vegetable food of the
ptople, fo as to occupy the fame proportion of
the' lands^ in tillage which wheat and other forts
of grain for human food do at preientj the fame
quantity of cultivated land would maintain a
much greater number of people, and the la-
bourers being generally fed with potatoes, a
greater furplus would remain after replacing all
the (lock znd maintaining all the labour em-
ployed in cultivation. A greater fliare of this
furplus too would belong to the landlord. Po-
pulation would increafe, and rents would rife
much beyond what they are at prefent.

The land which is fit for potatoes, is fit for
fdnxift every other uleful vegetable. If they
ii^ccupied the. fame proportion of cultivated land
A^hich corn does at prelent, they would regulate,
in die fame manner, the . rent of the greater part
of other cultivated land.

In fonoe parts of Lancafhire it is prei^mded,
I have been told, that bread of oadx^sal is a
heartier food for labouring people than wheat^en
. btead,^ and I have frequendy hea^ d tiie fame
do6brine J>eld in Scotland. I am, however,
fbmewhat doubtful of the trixh of it. The com-

mon

THE WEALTH OF NATIONS. • » 851

mon people in Scotland, who are fed with oat- chap.
meal, are in general neither fo flxong nor fo
handfome as the fame rank of people in Eng-
land, who are fed with wheatcn bread. They
neither work fo wel), nor look {q well ; and as
there is not the fanne difference between the
people of fafhiofi in the twQ couatries^ eKpcrience
would fcem to fliow, that the food of the com-
ixion people in Scotland is not fo fuitabk to the
human ^onftitution as th^t of theu* nei^bours of
the fame rank in £n^i^^ But it fcems to be , A a
otherwife with potatoes. The chairmen, porters, I /n^* 6>taU // . :
and coalheavers in London, and thofe unfortunate W*^^-^ 4 ♦*<
v^oa^it who live by proftitution, the ftrongeftje/xo^^/i^.^..^/;, /.
men and the moft beautiful women perhaps in the ))/;"' ,/ u *
Bntim dominions, are fakl to be, the greater part
pf them, from the ioweft rank of people in Ireland,
who are generally fed i^^idi this root. No food
can afford a more decifive proof of its nourilhing
quality, or of its being peculiarly fuitable to the
hcakhofthe human conftitution.

It is difiicult to prcferve potatoes throu^ the
year, and impoffibAe to ftorc thena like corn, for
two or three yejirs together. The fear of not be*
ing able to fell them before they rot, difcouragcs
their cultivation, and is^ perhaps, the chief ob-
ftacle to their ever becoming in any great cMntry,
like bread, the principal vegetable foqd of aJl the
different ranks of the people.

ms% THE NATURE AND CAUSES OF

BOOK
I.

PART II.

0/ the Produce of Land which Jometimes does^ and
Jometimes does not^ afford Rent.

ILIUM AN food fecms to be the only produce
of land which always and neceffarily affords
ibmc rent to tlie landlord. Other forts of pro-
duce fometimes may and fbmetimes may not,
according to different circumflances.

After food, cloathing and lodging arc the two
great wants of mankind.

Land in its original rude ftate can afford the
materials of cloathing and lodging to a much
greater number of people than it can feed. In
its improved ftate it can fbmetimes feed a greater
number of people than it can fupply with thofc
materials; at leaft in the way in which they re-
quire them, and ^re willing to pay for them.
In the one ftate, therefore, there is dways a
luper- abundance of thofe materials, which arc
frequently, upon that account, of little or no
value. In the othir there is often ^ fcarcity,
which neceffarily augments their value. In the
one ftate a great part of them is thrown away
as ufelefs, and the price of what is ufed is con-
lidered as equal only to the labour and expence
of fitting it for ufe, and can, thj^refore, afford
no rent to the landlord. In the other they are
all made yfe o^ and there is frequendy a demand
for more than can be had. Somebody is always
willing to give more for every part of them than

wh^t

TflE WEALTH OF NATIONS. :J53

what is fufEcient to pay the expencc of bringing c M a p^
them to market. Their price, therefore, can al-
ways afford fome rent to the landlord.

The fkins of the larger animals were the ori-
ginal materials of cloathing. Among nations of
hunters and fhepherds, therefore, whofe food
confifts chiefly in the flefli of thofe animals,
every man, by providing himfelf with food, pro-*
vides himfelf with the materials of more cloath-
ing than he can we^r. If there was no foreign
commerce, the greater part of them would be
thrown away as things of no value. This was
probably the cafe among the hunting nations of
North America, before their country was difco-
vered by the Europeans, with whom they now
exchange their furplus peltry, for blankets,
fire-arms, and brandy, which gives it fome value.
In the prefent commercial ftate of the known
world, the mofl: barbarous nations, I believe,
among whom land property is eftabhfhed, have
fome foreign commerce of this kind, and find
among their wealthier neighbours fuch a demand
for all the materials of cloathing, which theif
land produces, and which can neither be
wrought up. nor confumed at home, as raifes
their price above what it cofts to fend them to
thofe wealthier neighbours. It afibrds, therefore,
fome rent to the landlord. When the greater
part of the highland cattle were confumed on
their own hills, the exportation of their hides
made the moft confiderable article of the com-
merce of that country, anii what they were ex-
ci\anged for afibrded fome addition to the rent

2 o^

IJ4 f^^ NATdRt AND CAUSSS CfP

'b o o K of d)C highland eftat^ The wool of En^amd^
which in old times could neither be confumed
nor wrought up at home, found a market ir^ the
then wealthier and more induilrious country of
Flanders, and ks pf ice afforded fomething to the
rent of the land which produced it. In coun-
tries not better cultivated than England was
then, or than the highlands of Scotland are now,
and which had no foreign commerce, the mate-
rials of cloathing would evidently be fo fuper-
abundant, that a great part of them would be
dut>wn away as ufelefs, and no part could siSbrd
any rent to the landlord.

The materials of lodging cannot always be
tranfportcd to fo great a diftance as thofe of
cloathing, and do not fo readily become an ob-
jcft of foreign conunerce. When they are luper-
abundant in the country which produces them,
it frcquenriy happens, even in the prefent com- .
mercial ftate of the world, that they are of no
value to the landlord. A good ftone quarry in
the neighbourhood of London would afford a
confiderable rent. In many parts of Scotland
and Wales it affords none. Barren timber for
building is of great value in a populous^ and
well-culthrated country> and the land which pro-
duces it affords a confiderable rent. But in
many parts of North America the kncflord
would be much obliged to any body who would
carry away the greater part of his large trees.
In fome parts of the highlands of Scotland the
bark is the only part -of die wood which, for
want of roads and water-carriage, can be fent to

market.

THE WEALTH* OF NATIONSv* ^55

market. The timber is iefc to rot upon the c ii a r.
ground. , When the materials of locking arc fo ^''
fuper- abundant, the part made ufe of is worth
only the labour and expence of fitting it fpr that
ufe. It affords no rent to the landlord, who ge^
nerally grants the ufe of- it to whoever takes the
trouble of aiking it. The demand of wealthier
nations, however, fometimes enables him to get
a rent for it. The paving of the ftreets of Lon-
don has enabled the owners of fame barren
rocks on the coaft of Scodand. to draw a rens
from whitt never afforded any before. The woods
of Norway and of the coa|ls of the Baltic, find a
market in many parts of Great Britain which they
could not find at home, and thereby afford fome
rent to their proprietors.

Countries are populous, not in proportion to
the number of people whom their produce can
cloath and lodge, but in proportion to that of
thofe whom it can feed. When food is pro-
vided, it is eafy to find the neceflary cloathing
and lodging. But though thbfe are at hand, it
may often be difficult to find food. In fome
farts even of the Britifh dominions what is called
A Houfe, may be built by one day's labour of
one man. The fimpleft fpecies of cloathing, the
Ikins of animals, require fomewhat more labour
to drefs and prepare them for ufe. They do .
not, however, require a great deal. Among fa-
vagc and barbarous nations, a hundredth or little
more than a hundredth part of the labour of
the whole year, will be fufficient to provide them
with fuch cbathing and lodging as fktisfy the
6 greater

25C THE NATtTRfe AND CAtJSES OF

B o 'o K gf eater part of the people, AH the other ninety-^
'* nine parts are frequently no more than enough to
provide them with food»

But when by the improvement and cidtiva-'
tion of land the labour of one family can pro-
vide food for two, the labour of half the Ibciety
becomes fufficient to provide food for the whoici
The other half, therefore, or at leaft the greater
part of them. Can be employed in providing
other things, or in fatisfying the other wants
and fancies of mankind* Cloathing and lodg-
ing, houfhold furniture, and what is called
Equipage, are the principal objefts of the
greater part of thoie wants and fancies. The
rich man confumes no more food thin his poor
neighbour. In quality it may be very different,
and to feleft and prepare it may require mor^
labour and art; but in quantity it is very nearly
the fame. But compare the Ipacious palace and
great wardrobe of the one, with the hovel and
the few rags of the other, and you will be fen-
fiblc that the difference between their cloathing,
lodging, and houfhold furniture, is almoft as
.great in quantity as it is in quality. The defirc
of food is limited in every man by the narrow
capacity of the human ftomach ; but the defire
of the conveniences and ornaments of building,
drefs, equipage, and houfhold furniture, feems
to have no limit or certain boundary. Thofe,
therefore, who have the command of more food
dian they themfclves can . confume, are always
willing to exchange the furplus, or, what is the
fame thing, the price of it, for gratifications of

this

Trt£ WfeALtti OF NATIONS. 257

this Other kind. What is over and above fatif- c ri a p,

* XI

fying the limited defire, is given for the amufe-
« ment of thofe defires which cannot be fatisfiedj
but feem to be altogether endlefs. The poor>
in order to obtain food, exert themfelves to gra-
tify thofe fancies of the rich, and to obtain it
more certainly, they vie with one another in th«
cheapness and perfedion of their work.. The
number of workmen increafes with the increaf-
Ihg quantity of food, or with the growing im-»
provement and . cultivation of the lands ; and as
the nature of their bufinefs admits of the utmoft
fubdivifibns of labour, the quantity ef materials
which they can wofk up, increafes in a much
greater proportion than their numbers. Hence
arifes a demand for every ibrt of material which
liuman invention can employ, either ufefuUy or
ornamentally, in building, drefs, equipage, or
houftiold furniture; for the foflils and minerals
contained in the bowels of the earth, the precious
metals^ and the precious ftones.

Food is in this manner, not only the original
fcurce of rent, but every other part of the pro-*
duce of land which afterwards affords rent, de-
rives that part of its value from the improvement
of the powers of labour in producing food by
means of the improvement and cultivation of
landi

Those other parts of the produce of land,
however, which afterwards afford rent, do not
afford it always. Even in improved and culti-
vated countries, the demand for them is not al-
ways fuch as to afford a greater price than what
. Vol.1. S is

258 THE NATURE AND CAUSES OF

B o o K is fufficienc to pay the labour, and retrace, to^
gcther with its ordinary (K-ofits, the ftock which
muft be employed in bringing them to market.
Whether it is or is not fuch, depends upon dif-
ferent circumftances.

Whether a coal-mine, for example, can affbrd
any rent, depends partly upon its fertility, and
pardy upon jts fituation.

A MINE of any kind may be faid to be cither
fertile or barren, according as the quantity of
mineral which can be brought from it by a cer-
tain quantity of labour, is greater or kfs than
what can be brought by an equal quantity from
the greater part of other mines of the fame

lund.

Some coal-mines advantageoufiy fituated, cannot
be wrought on account of their barrennefs. The
produce does not pay the expence. They can
afford neither profit nor rent.

There are foriie of which the produce is barely
fufficient to pay the labourer, and replace, together
with its ordinary profits, the ftock employed
in working them. They afford fomc profit to
the undertaker of the work, but no rent to the
landlord. They can be wrought advantageoufiy
by nobody but the landlord, who being Kimfelf
undertaker of the work, gets the ordinary profit
of the capital which he employs in it. Many
coal-mines in Scodand are wrought in this nnan-
ner, and can be wrought in no other. The land-
lord will allow nobody elfe to work them without
paying fome rent, and nobody can afibrd to pay
aoy**

Other

THE WEALTH OP NATIONS.- »59

-Other coal-mines in the fame country fuffi- chap.
ciently fertile, cannot be wrought on account of >
their fuuation. A quantity of mineral fufficicnt to
defray the expence of working, could be brought
froni the mine by the ordinary, or even lefs tha«
the ordinary quantity of labour : But in an inland
country, thinly inJiabited, and without either good
roads or water-carriage, this quantity could npt be
fold.

CoAL^ are a lefs agreeable fewel than wood:
they are faid too to be lefs wholefome. The ex-
pence of coals, therefore, at the j^ce where they
are confumed, mufl generally be fomewhat le&
than that of wood.

The price of wood again varies with the ftate
of agriculture, nearly in the fame manner, and
exactly for the fame reafbn, as the price of cat-
tle. In its rude beginnings the greater part of
every country is covered with wood, which ia
then a mere incumbrance of no value to the
landlord, who would gladly give it to any body
for the cutting.^ As agriculture advances, the
woods arc partly cleared by the progrefs of till-
age, and partly go to decay in Confequence of
the increafed number of cattle. Thefe, -though
they do not increafe in the fame proportion as
corn, which is altogether the acquifition of hu- ^

man induftry, yet multiply under the care and
proteftion of men ; who ftore up in the feafon of
plenty what may maintain them in that of fear-
city. Who through the whole year furnilh* them
with a greater quantity of food than unculti-
vated nature provides for theaii . and who by de^

S 2 ftroying

zfo THE NATURE AND CAUSES OF

BOOK ftroying and exdrjmtmg their enemies^ fecnre
^ them in the free enjoyment of all that fhe pro*
vjdes. Numerous herds of cattle, when allowed
to wander through the woodsi though they do
not deftroy the old trees^ hinder any young ones
from coming up, fo that in the courfe of a cen-
tury or two the whole foreft goes to ruin. Thq
fcarcity of wood then raifes its price^ It affords
a good rent, and the landlord fomedmes finds
d)at he can fcarce employ his beft lands mote
advantageoufly than in growing barren timberj
of which the greatnefs of the profit ofrw com-
penfates the latends. of the returns. This feems
in the prcfent times to be nearly the ftate of
things in feveral parts of Great Britain, where
the profit of planting is found to be equal to
that of either com or pafrure* The advantage
which the landlord derives from planting, can
no-where exceed, at leaft for any confider^ble
time, the rent which theie could aSbrd him;
and in an inland country which is highly culti-
vated, it will frequently not fall much fhort of
this rent. Upon the fea-coafl of a well-im-
proved country, mdeed, if coals can conveniently
be had for fewel, it may fometimes be cheaper to
bring barren timber for building from lefs culti-
vated foreign countries, than to raife it at home.
In the new town of Edinburgh, built within thefe
few years, there is not, perhaps, a fingle flick of
Scotch timber.

Whatever may be the price of wood, if that

of eoals is fuch that the expence of a coal-fire is

.neady equal ttf that of a wOod one, wc may be

afiurcd.

TH» WEALTH OF NATIONS. 261

aflbred^ that at that place^ and in thefe circum^ c H a p»
ftances, the price of coals is as high as it can be.
It iibems to l?e fo in fome of the inland parts df
England, particularly in Oxfordihire, where it is
^fual, even in the fires of the common people^ to
mix coals and wood together, and where the dif-
ference in the expence of thofe two forts of fewcl
cannot, therefore, be very great.

Coals, in the coal countries, are every-where
much below this higheft price. If they were
not, they could not bear the ^xpence of a diftant
carriage, either by land or by water. A finall
(quantity only could be fold, and the coal maf-
ters and coal proprietors find it more for their
int:erefl: tQ fell a great quantity at a price Ibme-
what above th? low^, than a fmall quantity at
the higheft^ The moft fertile coal-mine too, re-
gulates the price of <:oals at all the other nfiines
in its neighbourhood, ^oth the proprietor and
the undertaker of the work find, the one th^t he
can ^t 11 greater rent, the oth^^r ^at he can get
a greater profit^ by Ibmewhat underfelling all
their neighbours. Their neighbours are fooa
obliged to fell at the lame price, though they
cannot fo well afford it, and though It always di^
minifhes, and fom^times takes away altogether
both their rent and their profit. Some worl^
are abandoned altogether; others cait aflbrd no
rent, and can be wrought pnly by the pro-
prietor.

The loweft price at which coals cjm be fold
for any confiderable time, is, like that of all other
commodities, the price which is barely fuifif:ient

S3 t«

26t the; nature and causes^ op

B o o K to replac*, together with its ordinary profiK, the
ftock which muft be employed in bringing them
tcr market. At a coal-mine for which the land-
lord can get no rent, but which he muft either
work himfelf or let it alone altogether, the price
\ of coals muft generally be nearly about this
price.

Rent, even where coals afford one, has gene-
rally a fmaller fliare in their price than in that of
moft other parts of the rude produce of land.
The rent of an eftate above ground, commonly
amounts to what is fuppofed to be a third of the
grofs produce ; and it is generally a rent certain
and indej^endent of the occafional variations in
the crop. In coal-mines a fifth of the grofs pro-
duce is a very great renti a tenth the common
rent, and it is feldom a rent certain, but depends
upon the occafional variations in the produce.
Thefe are fo great, that in a country where thirty
years purchafe is confidered as a moderate price
for the property of a landed eftate, ten years
purchafe is regarded as a good price for that of a
coal-mine.

The value of a coal-mine to the proprietor
frequently depends as much upon its fituation as
upon its -fertility. That of a metallic mine
oepends more upon its fertility, and lefs upon
its fitqation. The coarfe, and ftill more the
precious metals, when feparated from the ore,
are fp valuable that they can generally bear the
cxpence of a very long land, and of the moft
diftant fea carriage. Their market is not con-
fined to the countries in the neighbourhood of

th9

THE WEALTH OF NATIONS, 463

die mine, but exwnds to the whole worid. The chap.
copper of Japan makes an article of commerce
in Europe 5 the iron of Spain in that of Chili
and Peru. The filver of Peru finds its way, not
only to Europe, but from Europe to China,

The price of coals in Weftmorland or Shrop-
fhire can have little effeft on their price at New-
caftle ; and their price in the Lionnois can have
none at all. The produftions of fuch diftant
coal-mines can never be brought into competi-
tion with one another. But the produftions of the
moft diftant metallic mines frequently may,
and in fad commonly are. The price, there-,
fore, of the coarfe, and ftill more that of the\
precious metals, at the moft fertile mines in the
world, muft neceffarily more or lefs afFeft their
price ^t every other in it. The price of copper/
in Japan muft have fome influence upon its price/
at the copper mines in Europe. The price of
filver in Peru, or the quantity either of labour
or of other goods which it will purchafe there,
muft have fome influence on its price, not only
at the filver mines of Europe, but at thofe of
China. After the difeovery of the mines of
Peru, the filver mines of Europe were, the
greater part of them, abandoned. The value oY
filver was fo much reduced that their produce
could no longer pay the expence of working
them, or replace, with a profit, the food, cloaths,
lodging and other neceflaries which were con-
fumed in that operation. This was the cafe too
with the mines of Cuba and St. Domingo, and

S 4 even

264 THE- NATURE AND CAUSES OF

B Q o K even with the ancient mines of Pcni| 9&€r the
difcovery of thofc of Potofi, .

The price of every metal at every mine> there-

lbre> being regulated in fome meafure by it^

price at the moit fertile mine in the world tha(

is actually wrought,, it can at the greater part of

mines do very little piore than pay the cxpence

of ^orl^ipg^ and cap fe^dom afford a very high

rent to the landlord. Rent, accordingly, feems

/at the greater part of min^s .to haye but a fmal|

/ iharc iij the -prige of the coarfe, and a ftill fmaller

[ in that of tlje precioys metals. Labqur and profit

^ make up the greater part of both.

A 51XTH part ^ of. the grofs produce may be
reckoned the average rent of the tin mines of
Cornwall, the moft fertile that are known in the
world, as we are tojd .by the Rev. Mr» Bor-
lace, vice-warden of the ftannaries. Some, he
fays, afford more, - and fome do not afford fo
much. A fixth part of the grofs produce is the
rent -top of feveral very fertilp lead ipincs in
Scotland.

In the filyer mines of Peru, we are told by
Fiezier and UUoa, the proprietor frequently ex-
afts no. other acknowledgment from the under-
taker of the mine, but that he will grind the ore
at his mill, paying him the ordinary multure or
price of grin4ing. Till 1736, indeed, the tax
of the king of Spafn amounted to pne-fifth of
the ftandard filver, which till then might be
confidered as the real rent of thp greater part
of the filver mines of Peru, the richeft which
have been known in the wqrld. If there had bepn

THE WEALTH OP NATIONS. se«5

i>o taxj this fifth would natural^ have belonged chap.
to the landlord^ and many mines might have
been wrought ^hich could not then be wrought,
becaufe they could not afibrd diis t». The tax
of the duke of Cornwall upon tin is fuppofed to
amount to more than five per cent or one-
twentieth part of the value i and whatever may
be his proportion, it would naturally too belong
to the proprietor pf the mine^ if on was duty
free. But if ypu a4d oqe-t9Ptatieth to one-fixtb,
you will find that the whole averlKge rent of the
<;tin mines of Cornwall^ was to the wh0le average
rent of the filver mines of Peru, ^s thirteen to
twelve. But the filver mines rf Peru arc not
now able to pay even this low rent, and the tax
vpon -filver was, in 1736, reduced fi^pm one-fifth
to ojie-t^ath. Even this tax upon filver too
gives more temptation to fmuggling than the tax
pf one-twpntieth upon tin ; and fmu^ling mufi:
be much eafier in the precious than in the bulky
commodity. The t^ of the king of Spain ac-
cordingly is faid to be very ill paid, and that of
%hc f^u^t of Cornwall very well. Rent, thcre-x
fore, it is probable, makes a greater part of the \
price of tin at the moft fertile tin mines, than it \
docs of filver at the moft fertile filver mines in/
the world. After replacing the ftock employed in
working thofe difierent mines, together . with its
ordinary profits, the refidue which remains to the
proprietor, is greater it fecms in the cparfej thai>
in the precious metal.

Neither ar<? the profit^ of th^ undertakers of
filver ndines commoiUy very great in JPeru, The

fame

i66 ' THE NATURE -AND CAUSES OF

BOOK fame moft refpeftat4e and 'v^^eH informed authors
acquaint us, that when any -perfon undertakes to
work a new mine in Peru, he is univer(ally
k>oked upoft as a man deftined to bankruptcy
and ruin, and is upon that account fhunned and
avoided by every body. Mining, it feems, is
confidered there in the lame light as here, as a
lottery> in -which the prizes do not compenfate the
blanksy thoiigh the greatnefs of fome tempts many
adventurers to throw away- their fortunes in fuch
unprofperods projects.

As the fovereign, Tiowever, derives a confider-
able part of his revenue from the produce of
filver iiiines, the* law in Peru gives every poffiblc
encouragement to the difcovery and working of
new ones. Whoever difcovers a new mine, i^
entitled to meafure off two hundred and forty-
fix feet * in length, according to what he fbp-
pofes to be the dircftion of the vein, and half as
much in - breadth. He becomes proprietor of
this jportion of the mine, and can work it with-
out paying any acknowledgment to the landlord.
The intereft of the duke of Cornwall has given
occafion to a regulation nearly of the fame kind
in that ancient dii^hy. In wafte and unincloled
lands any perfon who difcovers a tin mine, rnay
mark out its limits to a certain extent, which is
called bounding a mine. The bounder becomes
the real proprietor of the mine, and may either
work it himfelf, or give it; in leafe to another,
without the confent of the owner of the land, to
whom, however, a very fmall acknowledgment
muft be paid upon working it. In both regula-
tions

THE WEALTH OP NATIONS. 267

tions the facred rights of private property are c h a p,
facrificed to the fuppofed interefts of public re-
venue.

The fame encouragement is given in Peru to
the difcovery and working of new gold mines;
and in gold the king's tax amounts only to a
twentieth part of the ftandard metal, s It was once
a fifth, and afterwards a tenth, as in filver; but
it was found that the work could not bear even
the lowed of thefe two taxes. If it is rare, how-
ever, fay the fame authors, Frezier and UUoa,
to find a perfon who has made his fortune by 'a
filver, it is ftill much rarer to find one who has
done lb by a gold mine. This twentieth part
fcems to be the whole rent which is paid by the
greater part of the gold mines in Chili and Peru.
Gold too is much more liable to be fmuggled
than even filver ; not only on account of the
fuperior value of the metal in proportion to its
bulk, but on account of the peculiar way in
which nature produces it. Silver is very fekiom
found virgin, but, like moft other metals, is
generally mineralized with fome other body,
fi-om which it is impoflTible to feparate it in fuch
quantities as will pay for the expence, but by a
very laborious and tedious operation, which
cannot well be carried on but in workhoufes
eretfbed for the purpofe, and therefore expofed
to the inlpedion of the king's officers. Gold,
on the contrary, is almoft dways found virgin.
It is fometimes found in pieces of fome bulk 9
and even when mixed in fmall and almoft: infen-
fible piarticles with fand^ earth, and other extra-

3 neoui'

s6g THE NATURE AND CAUSES OF

JB Q Q K neous bodies, it can be feparated from them by
'* a very (hort and fimple operation, which can be
carried on in any private houfe by any body who
is poflTefTed of a fmall quantity of mercury. If
the king's tax, therefore, is but ill paid upon
01ver> ip is likely to be much worfe paid upon
gold ; and rent muft make a much fmaller part of
[the price of gold, than even of th?it of filvcr.

The loweft price at which the precious metals
can be fold, or the fmalleft quantity of other
goods for which they can be exchanged during
any confideraUc time^ is regulated by the fame
principles which fix the loweft ordinary price of
all other goods. The ftock which muft com*
monly be employedj the food, cloaths, and lodg-
ing which muft commonly be confumed in bring-
ing them from the mine to the market, determine
it. It muft at leail be fuificient to replace that
ftock, with the ordinary profits.

Th^ir higheft price, however, fcems not to
be neceffarily determined by any thing but the
actual fcarcity or plenty of thofe metals them^
felves. It is not determined by that of any
other commodity, in the fame manner as the
price of coals is by that of wood, beyond which
no fcarcity can ever raife it. Incrcafe the fcarcity
of gold to a certain degree, and the fmalleft bit
of it may become more prpcioys than a diamonds
and exchange for a greater quantity of other goods.

The demand for thpfe metals arifes partly
from their utility, and partly from their beauty.
If you except iron, they are more ufefiil thjm,
perhaps, any othifr metal. As they {u-e lefs

liable

•'

THE WEALTH OF NATIONS. 2^p

liable to ruft tod impurity, they can more eaffly chap,
be kept clean ; and the utenfils either of die
table or the kitchen are often tipon that account
more agreeable when made of them. A filver
bdiler is more cleanly than a lead, copper, or
tin one; and the fame quality would render a,
gol^ boiler ftill better than a filver one. Their
principal merit, however, arifes from their
beauty, which renders them peculiarly fit for
the ornaments of drdfs and furniture. No paint
or dye can give fo iplendid a colour as gilding.
The merit of their beauty is greatly enhanced
by their fcarcity. With the greater part of rich
people, the chief enjoyment of riches confifts in
the parade of riches, which' in their eye is never
fo complete as when they appear to pofleft thofe
decifive marks of opulence which nobody can
poffkfs but themfelves. In their eyes the merit
of an objedb which is ih any degree either ufeful
or beautiful, is greatly enhanced by its fcarcity,
or by the great labour which it requires to col-
Icft any confidcrable quantity of it, a labour
which nobody can afibrd to pay but themfelves.
Such objeds they are willing to purchafe at a
higher price than things much more beautiful
and ufeful, but more common. Thefe qualities!
of utility, beauty, and fcarcity, are the original/
foundation of the high price of thofe metais,^
or of the great quandty of other goods for which
they - can every-whcrc be exchanged. This
value was*antecedent to and independent of their
being employed as coin, and was the quality
wbi^ fitted them for that employment. That

employment.

270 THE NATURE AN© CAUSES OF

BOOK employment, however, by occafioning a new dc-
j^mand, and by diminifliing the quantity which could
/ be employed in any other way, may have aftcr-
l wards contributed to keep up or increafe their
I value.

The demand for the precious ftones arifes al-
together from their beauty. They are of no ufe,
but as ornaments j and the merit of their beauty
is greatly enhanced * by their fcarcity, or by the
difficulty and expence of getting them from the

(biine. Wages and profit accordingly make up,
upon moft occafioos, aimoft the whole of their
high price. Rent comes in but for a very fmall
Iharci frequently for no Ihare; and the moft
fertile mines only afford any confiderable rent.
When Tavernier, a jeweller, vifited the dia-
mond mines of Golconda and Vifiapour, he ^was
informed tliat the fovercign of the country, for
whofe benefit they were wrought, had ordered
all of them to be Ihut up, except thofe which
yield the largeft and fineft ftones. The others,
it feems, were to the proprietor not worth the
working.

As the price both of the precious metals and
fof the precious ftones is regulated all over the
; world by their price at the nioft fertile mine in it,
ithe rent which a mine of either can afford to its
proprietor is in propiortion, not to its abfolute,
but to what may be called its relative fertility, or
to its fuperiority over other min^ of the fame
kind. If new mines were difcovered as much
fuperior to thofe of Eotofi as they were fuperior
to thofe of Europe, the value of filver might be

THE WEALTH OF NATIOKS. vjt

ib much degraded as to render even the miae5 of c h a p*
Potofi not woi;th the working. Before the dif-
covery of the Spanilh Weft Indies, the nioft fer-
tile mines in Europe may . have afforded as great;
a rent to their proprietor as rhe richeft mines in
Peru do at' prefent. Though the quantity of
filver was much lefs, it might have exchanged
for an equal quantity of other goods, and the
proprietor's Ihare might have enabled him to
purchafe or command an equal quantity either of
labour or of commodities. The value 'both o£
the produce and of the xent, the real revenue
which they afforded both to the public and to the
proprietor, might have been the fame.

The moft abundant mines either of the pre-
cious metals or of the precious ftones could add
little to the wealth of the world. A produce of I
which . the value is principally derived from its )
fcarcity, is neceflfarily degraded by its abun-
dance. A fervicc of plate, and the other frivo-
lous ornaments of drefs and furniture, could be
purchafed for a fmaller quantity of labour, or
for a fmaller quantity of commodities; and in
this would confift the fole advantage which the
world could derive from that abundance.

It is otherwife in eftates above ground. The
value both of their produce and of their rent is
in proportion to their abfolute, and not to their
relative fertility. The. land which produces a.
^rtain quantity^ of food, cloaths, and lodgings
can always feed, cloath, and lodge a certain
number of people; and whatever may be thp'
proportion of the landlord, it will always give
^ him

•. - .

tjt THE NATtniE AND CAXJ&Ei Ot

BOOK him t j^oportioMblc command of the labour of
thofe people^ and of the commodities with "ii^h'ich
that labour can fupply him^ The value of the
moft barren lands is not diminifhed by the
neighbourhood of the itioft fertile. On the con-
trary^ it is generally increafed by it. The great
number of people maintained by the fertile lands
afford a market to many part4 of the produce of
the barren, which they could never have found
among thofe whom their own produce could
maintain.

Whatever increafes the fertility of land in
producing food, increafes not only the value of
the lands upon which the improvement is be-
llowed, but contributes likewife to increafe that
of many other lands, by creating a new demand
for their produce. That abundance of food, of
which, in confcqucnce of the improvement of
land, many people have the difpofal beyond
what they themfclves can confume, is the great
Icaufc of the demand both for the precious
Hnnetals and the precious flones, as well as for
every other convcniency and ornament of drefs^
lodging, houfhold furniture, and equipage^
Food not only conftitutes the principal part of
the riches of the world, but it is the abundance
of food which gives the principal part of their
value to many other forts of riches. T*he poor
inhabitants of Cuba and St. Domingo, when they
were firfl difcovered by the Spaniards, ufcd to
wear little bits of gold as ornaments in their hair
and other parts of their drefs. They feemed to
value them as we would . do any little pebbles of

fomewhat

' THE WEALTH:. OF 'NATIONS. >73

fomewhat more than ordinary beaaty, and*to^com- chap.-
fidcr them as juft worth the pidking up, but not ^ J ^
worth the refufing to any body who alked them;
They gave them to their- new guefts at the Mk\^'
.requeft, without leerajng to think that they had ^
made them any very valuable prefent. They
were aftonifhed to obferve the rage of the Spa- ^troL
niards to obtain them 5 and had no notion that
there could any-where be a country in which
many people had the difpofal of fo great a fupcr-^
fluity of foodj fo fcanty always among them-
felves, that for a very fmall quantity of thofe
glittering baubles they would willingly give as
much as might maintain a whole family foj*
many years. Could they have been made to un-^
derftand. this, the paflion of the Spaniards would
not have furprifed them.

PART HI.

Of the Variations in the Proportion between the
reJpeSiive Values of that Sort of Produce^ which
always affords Rent^ and of that -which fometimes
does andfometimes does not afford Rent.

^"T^ H E , increafing abundance of food, in con-
^ fequence of increafing improvement and
cultivation, muft necejQTarily increafe the demand
for every part of the produce of land which is
not food, and which can be applied either to ufe
or to ornament. In the whole progrefs of im-
provcnient, it might therefore be expected, there
fliould be only One variation in the comparative
\ Voju. I. T yalue$

274 THE NATURE AND CAUSES OF

B'O o.K values of thofe two different forts of produce.
The value of that fort which fomctimes does and
fometimes docs not afford rent, ihould conftandy
'irife in proportion to that which always affords
fomc rent. As art and induftry advance, the
materials of cloathiog and lodging, the uf^l
foiTils and minerals of the earth, the precious
metals and the precious .ftones ihould gradually
come to be more and more in demand, fhould
gradually exchange for a greater and a greater
quantity of food, or in other words, ihould gra-
dually become dearer and dearer. This accord-
ingly has been the caie with moil of dielc
things upon moib . occafions, and would have
been the cafe with all of them upon all occaiions,
if particular accidents had not upon fome occa-
fions increafed the fupply of ibmc of them in a
ftill greater proportion than the demand.

The value of a free-ilone quarry, for exam-
ple, will necefTarily increafe with the increaiing
improvement and population of the country
round about it; efpecially if it ihould be the
only one in the neighbourhood. But the value
of a Giver mine, even though there ihould not be
another within a thoufand miles of it, will not
neceflarily increafe with the improvement of the
country in which it is fituated. The maricet for
the produce of a free-ilone quarry can feldom ex-
tend more than a few rnile$ round about it, and
the demand muft generally be in pr(4>Q]tiQn tor
the improvement and population ' q£ that fhiall
diitri(9:. But the pii^rket ibr the produce of a.

filver

THE WEALTH OF NATIONS. 275

filver mine may extend over the whole known chap*
world. Unlefs the world in general, therefore, ^''
be advancing in improvement and population,
the demand for filver might not be at all ih-
creafed by the improvement even of a large
country in the neighbourhood of the mine.
Even though the worW in general were improV"-
ing, yet, if, in the courfe of its improvement,
new mines fhould be difcovered, much more fer-
tile than any which had been known before,
though the demand for filver would neceflarily
increafe> yet the fupply might incrcafe in fo
much a greater proportion, that the real price of
that metal might gradually fallj that is, any
given quantity, a pound weight of it, for exam-
ple, might gradually purchafe or command a
fmaller and a fmaller quantity of labour, or ex-
change for a fmaller and a fmaller quantity of
corn, the principal part of the fubfiftence of the
labourer.

The great market for filver is the comrnercial
and civilized part of the world.

If by the general progrefs of improvement
the demand of this market ftiould incrcafe, while
at the fame time the fupply did not increafe in
the fame proportion, the value of filver would
gradually rife in proportion to that of corn.
Any given quantity of filver would exchange for
a greater and a greater quantity of corn ; or, in
other words, the average money price of corn
would gradually become cheaper and cheaper. .

If, on the contrary, the fupply by fome acci- ' [ ^
dent fliould increafe for many years together in a

T % greater

tjh THE NATURE AND CAUSES OP

BOOK greater proportion than the demand, that metal
would gradually become cheaper and cheaper;
or, in. other words, the average money price of
corn would, in fpite of all improvements, gra-
dually become dearer and dearer.

But if, on the other hand, the fupply of the
metal fliould increafe nearly in the fanie propor-
.j tion as the demand, it would continue to pur-
^ chafe or exchange for nearly the fame quantity
of corn, and the average money price of corn
would, in fpite of all improvements, continue
very nearly the fame.

These three feem to exhauft all the pofliblc
combinations of events which can happen in the.
progrefs of improvement i and during the courfe
of the four centuries preceding the prefent, if we
may judge by what has happened both in France
and Great Britain, each of thofe three different
combinations feem to have taken place in the
European market, and nearly in the fame order
too in which I have here fet them down.

•

JDigreJJion concerning the Variations in the Value
of Silver during the Courfe of the Four lajl Cen*

turtes^

First Period.

N 1350, and for fome time before, the avieragc

price of the quarter of wheat in England

feems not to have been eftimated lower than four

ounces of filver. Tower-weight, equal to about

twenty IhiUings of our prefent money. From

/ this

THE WEALTH OP NATIONS. 277

tKis price it feems to have fallen gradually to c h a p.
two ounces of filver, equal to about ten fhillings
of our prefent money, the price at which we find
it eftimated in the beginning of the fixteenth cen-
tury, and at which it feems to have continued to^
be eftimated till about 1570.

In 1350, being the 25th of Edward III, was
enafted what is called, The ftatute of labourers.
In the preamble it complains much of the info-
lence of fervants, who endeavoured to raife their
wages upon their mafters. It therefore ordains>
that all fervants and labourers fhould for the fu-
ture be contented with the fame wages arid live-
ries (liveries in thofe times fignified, not only
cloaths, but provifions) which they had been ac-
cuftomed to receive in the 20th year of the king,
and the four preceding years ; that upon this ac-
count their livery wheat fhould no-where be
eftimated higher than ten -pence a bulhel, and
that it ftiould always be in the option of the
matter to deliver them either the wheat or the
money. Ten-pence a bufhel, therefore, ha*d, in
the 25th of Edward III, been reckoned a very
moderate price of wheat, fince it required a par-
ticular ftatute to oblige fervants to accept of it
in exchange for their ufual livery of provifions ;
and it had been reckoned a reafonable price ten
years before that, or in the i6th year of the king,
the ter|Ti to which the ftatute refers. But in the
i6th year of Edward IH, ten-pence contained
about half an ounce of filver. Tower- weight, and
was nearly equal to half a . crown of our prefent
TOoney. Four ounces of filver. Tower-weight,

T 3 therefore.

378 THE NATURE AND CAUSES OF

BOOK therefore, equal to fix (hillings and eight-pence
of the money of thofe times, and to near twenty
fhillings of that of the prefent, muft have been
reckoned a moderate price for the quarter of
eight bufhels.

This ftatute is furely a better evidence of
what was reckoned in thofe times a moderate
price of grain, than the prices of fome particular
years which have generally been recorded by hi-
ftorians and other writers on account of their
extraordinary dearnefs or chtapnefs, and from
which, therefore, it is difficulc to form any judg-
ment concerning what may have been the ordi-
nary price. There are, befides, other reafons for
believing that in the beginning of the fourteenth
century, and for fome time before, the common
price of wheat was not lefs than four ounces of
filver the quarter, and that of other grain in pro-
portion.

In 1309, Ralph de Born, prior of St. Auguf-
tine's, Canterbury, gave a feaft upon his inftalla-
tion-day, of which William Thorn has preferved,
not only the bill of fare, but the prices of
many particulars. In that feaft were confumed,
I ft. Fifty-three quarters of wheat, which coft
nineteen pounds, or feven fliillings and two-
pence a quarter, equal to about one-and-twenty
Ihillrngs and fix-pence of our prefent money ;
2dly, Fifty-eight quarters of malt, which coft
fevcnteen j)Ounds ten fliillings, or fix fliillings a
quarter, equal to about eighteen fliillings of our
prefent money : ^dly. Twenty quarters of oats,
which coft four pounds, or four fliillings a cjuar-

9 ter.

THE WEALTH OF NATIONS. n-r^

ter, equal to about twelve fhilHngs of our prefent c h a f.^
money. The prices of malt and oats feem here
to be higher than their ordinary proportion to,
the price of wheat.

These prices are not recorded on account of
their extraordinary dearnefs or cheapnefs, but are
mentioned accidentally as the prices adiually paid
for large quantities of grain confumed at a feaft
which was famous for its magnificence.

In 1262, being the 51(1 of Henry III, was re-
vived an ancient ^ftatute called, 7he Affize of
Bread and Ale^ which, the king fays in the pre-
amble, had been made in the times of his pro-
genitors fometime Jcings of England. It is pro-
bably, therefore, as old at lead as the time of his
grandfather Henry II, and may have been as old
as the conqueft. It regulates the price of bread
according as the prices of wheat may happen to
be, from one fliilling to twenty Ihillings the
quarter of the money of thofe times. But fta-
tutes of this kind are generally preftmed to pro-
vide with equal care for all deviations from the
middle price, for thofe below it as well ^ for
thofe above it. Ten fliilliiigs, therefore, con-
taining fix ounces of filver, Jiower-weighr, and
equal . to about thirty Ihilling? of our prefent
money, muft, upon this fuppofition, have been
reckoned the middle price of the quarter of
.wheat when this ftatute was firft enafted, and
muft have continued to be fo in the 51ft of
Henry III. We cannot therefore be very wrong
io fuppofing that the middle price was not lefs
than one-third of the higheft price at which this

T 4 ftatute

i8o THE NATURE AND CAUSES OF

BOOK ftatutc regulates the price of bread, or than fix
(hillings and eight-pence of the money of thofe
times, containing four ounces of filver. Tower-
weight.

From thefe different fafts, therefore, we feem
to have feme reafon to conclude, that about the
middle of the fourteenth century, and for a con-
fiderable time before, the average or ordinary
price of the quarter of wheat was not fuppofed to
be lefs than four ounces of filver. Tower-weight.

From about the middle of the fourteenth to
the beginning of the fixtcenth century, what was
reckoned the reafonable and moderate, that is the
ordinary or average price of wheat, feems to have
funk gradually to about one-half of this price i
fo as at laft to have fallen to about two ounces of
filver. Tower-weight, equal to about ten (hillings
of our prefent money. It continued to be efli-
mated at this price till about 1570.

In the houfliold book of Henry, the fifth earl
of Northumberland, drawn up in 15 12, there are
two different eftimations of wheat. In one of
them it is computed at fix (hillings and eight-
pence the quarter, in the other at five (hillings
and eight-pence only. In 15 12, fix (hillings and
eight pence contained only two ounces of filver.
Tower- weight, and were equal to about ten (hil-
lings of our prefent money.
^0*^ From the 25th of Edward III, to the begin-
\ ; -^ rfing of the reign of Elizabeth, during the fpace
\** of more than two hundred years, (ix (hillings and
eight-pence, it appears from fcveral diflTerent
ftatutesj had continued to be confidpred a$ what

THE WEALTH OF NATIONS. 2«f

is called the moderate and feafonable, that is the c h a p.
ordinary or average price of wheat. The quantity
of filver, however, contained in that nominal fum
was, during the courfe of this period, continually
diminifhing, in confequence of fome alterations
which were made in the coin. ' But the increafe
of the value of filver had, it feems, fo far com-
penfated the diminution of the quantity of it con-
tained in the fame nominal fum, that the legiflaturc
did not think it worth while to attend to this cir-
cumftance.

Thus in 1436 it was enacted, that wheat might
be exported without a licence when the price was
fo low as fix (hillings and eight-pence: And in
1463 it was enafted, that no wheat fhould be im-
ported if the price was not above fix fhillings
and eight-pence the quarter. The legiflaturc
had imagined, that when the price was fo .low,
there could be no inconveniency in exportation,
but that when it rofe higher, it became prudent
to allow of importation. Six fhillings ^nd eight-
pence, therefore, containing about the fame
quantity of filver as thirteen fhillings and four-
pence of our prefent money (one third part lefs
than the fame nominal fum contained in the time
of Edward III), had in thofe times been con-
fidered as what is called the moderate and reafon-
able price of wheat.

In 1554, by the ift and 2d of Philip and
Mary; and in 1558, by the ift of Elizabeth, the
exportation of wheat was iq the fame manner
proI\ibited, whenever the price of the quarter
ihould exceed fix fhillings and eight-pence,

which

ti% THE NATURE AND CAUSES OF

• o 6 K which did not then contain two penny worth mare
\ -I ^ filvcr than the fame nominal lum does at prefent.
But it had foon been found that to reftrain the
exportation of wheat till the price was fo very low,
was, in reality, to prohibit it dtc^ether.' In
■ 1562, therefore, by the 5th of Elizabeth, the
exportation of wheat was allowed from certain
ports whenever the price of the quarter fliould
not exceed ten fhillings, containing nearly the
fame quantity of filver as the like nominal fum
does at prefcnt. This price had at this time,
therefore, been confidered as what is called the
moderate and rcafonable price of wheat. It agrees
nearly with the eftimation of the Northumberland
book hi 1512.

That in France the average price of grain was,
in the fame manner, much lower in the end of the
fifteenth and beginning of the fixteenth century,
than in the two centuries preceding, has been ob-
« .t ferved both by Mr. Duprc de St. Maur, and by

yi?"* the elegant ^uthor of the Effay on the police of
grain. Its price, during the fame period, had
probably funk in the fame manner through the
greater part of Europe.

This rife in the vahie of filver, in proportion
to that of corn, may either have been owing al-
together to the increafe of the demand for that
metal, in confequence of increafing improve-
ment and cultivation, the fupply in the mean
time continuing the fame as before : Or, the de-
mand continuing the. fame as btfore, it may have
been owing altogether to the gradual diminution
of the fupply i the greater part of the mines

which

THE WEALTH OP NATIONS. ^ 283

which were then known in the world, being c h a p.
nouch iCi^haufted, and confequently the expence
of working thenn much increafed; Or it may
have been owing partly to the one and partly
to the other of thofe two circumftances. In the
end of the fifteenth and beginning of the fix-
teenth centuries, the greater part of Europe was
approaching towards a more fettled form of go-
vernment than it had enjoyed for feveral ages
before. The increafe of fecurity would na*
turally increafe induftry and improvement; and
the demand for the precious metals, as well as
for every other luxury and ornament, would na-
turally increafe with the increafe of riches. A
greater annual produce would require a greater
quantity of coin to circulate it; and ^ greater
number of rich people would require a greater
quantity of plate and other ornaments of filver.
It is natural to fuppofe too, that the greater part
of the mines which then fupplied the European
market with filver, might be a good deal ex-
haufted, and have becx)me more expenfive in the
working. They had been wrought many of them
from the time of the Romans.

It has been the opinion, however, of the
greater part of thofe who have written upon the
prices of commodities in ancient times, that,
from the Conqueft, perhaps from the invafion of
Julius Caefar, till the difcovery of the mines of
America, the value of filver was continually
diminilhing. This opinion they feem to have
been led into, partly by the obfervations which
they had occafion to make upon the prices both

z$^ THE NATURE AND CAUSES OF

B o o K of corn and of fome other parts of the rude pro-*
duce of land ^ and partly by the popular notion,
that as the quantity of filver naturally increafes in
every country with the increafe of wealth, fo its
value diminiflies as its quantity increafes.

In their obfervations upon the prices of corn,
three different circumftances feem frequently to
have mifled them.

First, In ancient times almoft all rents were
paid in kind; in a certain quantity of corn,
cattle, poultry, &c. It fometimes happened,
however, that the landlord would ftipulate^ that
he Ihould be at liberty to demand of the tenant,
either the annual payment in kind, or a certain
fum of money inftead of it. The price at which
the payment in kind was in this manner ex-
changed for a certain fum of money, is in Scot-
land called the converfion price. As the option
is always in the landlord to take either the fub-
ftance or the price, it is neceffary for the fafety
of the tenant, that the converfion price Ihould
rather be below than above the average market
phicc. In many places, accordingly, it is not
much above one-half of this price. Through
the greater part of Scotland this cuftom ftill
continues with regard to poultry, and in fome
places with regard to cattle. It might probably
have continued to take place too with regard to
corn, had not the inftitution of the public fiars
put an end to it. Thefe are annual valuations,
according to the judgment of an aflize, of the
average price of all the different forts of grain,
ai^ of all the different qualities of each, accord-

ingj

THE WEALTH OF NATIONS* t$s

ing to the a<9:ual market price in every different chap.
county. This inftitution rendered it fufEciently
fafe for the tenant, and^ much more convenient
for the landlord, to convert, as they call it, the
corn rent, rather at what fhould happen to be
the price of the fiars of each year, than at any
certain fixed price. But the writers who have
colle&ed the prices of corn in ancient times,
feem frequently to have miftaken what is called
in Scotland the converfion price for the aftual
market price. Fleetwood acknowledges, upon
one occafion, that he had made this miftake.
As he wrote his book, however, for a particular
purpofe, he does not think proper to make this
acknowledgment till after tranfcribing this con-
verfion price fifteen times. The price is eight
fhillings the quarter of wheat. This fum in
1423, the year at which he begins with it, con-
tained the fame quantity of filver as fixteen fhil-
lings of our prefent money. But in 1562, the
year at which he ends with it, it contained no
more than the fame nominal fum does at pre-
feht.

Secondly, They have been miQed by the flo-
venly manner in which fome ancient ftatutes of
affize had been fometimes tranfcribed by lazy
copiers; and fometimes perhaps aftually com-
pofed by the legiflature.

The ancient ftatutes of alTize feem to have be-
gun always with determining what ought to be
the price of bread and ale when the price of
wheai and barley were at the lowefl, and to have
proceeded gradually to determine what it ought

tB6 THE NATURE AN1> CAUSES OF

BO o K to be, according as the prices of thofe two forts
of grain -fliould gradually rife above this loweft
price. But the tranfcribcrs of thofe ftatutcs feein
frequently to have thought it fufficieiit, to copy
the regulation as far as the three or four firfl: and
loweft prices j faving in this nnanner their own
labour, and judging, I fuppofe, that this was
enough to fliow what proportion ought to be ob-
ferved in all higher prices.

Thus in the aflize of bread and a!e, of the 5rft
of Henry III, the price of bread was regulated
according to die different prices of wheat, fronl
one ftiiiling'to twenty (hillings the quarter, of
the money of thofe times. But in the manu-
fcripts from which all the different editions of
the ftatutes, preceding that of Mr. RufFhead,
were printed, the copiers had never tranfcribed
this regulation beyond the price of twelve fhil-
lings. Several writers, therefore, being mifled
by this feulty tranfcription, very naturally con-
cluded that the middle price, or fix (hillings the
quarter^ equal to about eighteen IhiHings of our
prefent money, was the ordinary or average price
of wheat at that time.

In the ftatute of Tumbrel and Pillory, enafted
nearly about the fame time, the price of ale is
regulated according to every fixpence rife in the
price of barley, from two (hillings to four (hil-
lings the quarter. That four (hillings, however,
was not confidered as the higheft price to which
barley might frequently rife in thofe* times, and
that thefe' pri<?es were only given as an example
of tht proportion which otight to be obferveti in

all

THE WEALTH OF NATIONS* 387

all other prices, whether higher or lower, we may c h a r-

infer from the lafl: words of the ftatote -, ** et fic

" deinceps crefcetur vel diminuetur per fex de-

*' narios." Theexpreffion is very flovenly, but

the meaning is plain enough ; *^ That the price

^^ of ale is in this manner to be increafed or di-

^* miniflied according to every fixpence rife or

^* fall in the price of barley," In the compolition

of this ftatute the legiflature itfelf feems to have

been as negligent as the copiers were in the tran-

fcription of the other.

In €n ancient manufcript of the Regiam Ma-
jeftatem, an old Scotch law book, there is a
ftatute of aflize, in which the price of bread is
regulated according to all the different prices of
wheat, from ten-pence to three Ihillings the
Scotch boll, equal to about half an Englillt
quarter. Three ihillings Scotch, at the time
when this aflize is fuppofed to have been enaded,
were equal to about nine ihillings iterling of
our prefent money. Mr. Ruddiman feems * to
conclude from this, that three ihillings was the
highefl price to which wheat ever rofe in thojfe
times, and that ten-pence, a ihilling, or at moit two
IhiDings, were the ordinary prices. Upon coniiilt-
ing the manufcript^ however, it appears evidently,
that a}l thcie prices are only ict down as examples
of the? proportion which ought to be obferved be-
tween the refpedive prices of wheat and bread.
The laft words of the ibtute are, " reliqua judj-
^ cabis fccundum prsefcripta habendo refpeftum

* See bit prelace^a Anderfim's DiplomataScotbD.

*^ ad

283 THE NATURE AND CAUSES OF

ad pretium bladi-" ^' You fliall judge of the
remaining cafes according to what is above
written having a relpeft to the price of corn."
Thirdly, They feem to have been mifled too
by the very low price at which wheat was fome-
times fold in very ancient times ; and to have
imagined, that as its loweft price was then much
lower than in later times, its ordinary price
muft likewife have been much lower. They
might have found, however, that in thofe ancient
times, its higheft price was fully as much above,
as its loweft price was below any thing tljat had
ever been known in later times. Thus in 1270,
Fleetwood gives us two prices of the quarter of
wheat. The one is four pounds fixteen fliiliings
of the money of thofe times, equal to fourteen
pounds eight Ihillings of that of the prefent; the
other is fix pounds eight {hillings, equal to nine-
teen pounds four Ihillings of our prefent money.
No price can be found in the end of the fifteenth,
or be^nnmg of the fixteenth century, which ap-
proaches to the extravagance of thefe. The
price of corr^ though at all times liable to varia-
tion, varies moft in thofe turbulent and dif-
orderly focieties, in which the interruption of all
commerce and communication hinders the plenty
of one part of the country from relieving the
fcarcity of another. In the diforderly ftate of
England under the Plantagenets, who governed it
from about the middle of the tv/elfth, till to-
wards jthe end of the fifteenth century, one
diftridt tnight be in plenty, while another at no
great diftanccj, by having its crop deftroyed
2 either

(•

THE WEAi;.XH OF NATIONS. 289

-tither by fome accident of the feafons, or by the c hap;
inciirfion of fonne neighbouring baron, might be
foffo-ing all the horrors of a famine; and yet if
the lands of fome hoftile lord were interpofed
between them, the one might not be able to
'give the leaft ^ffiftance to the other. Under the -
vigorous adminiftration of the Tudors, who go-
verned England during the latter part of the fif-
teenth, and through the whole of the fixteenth
century, no baron was powerful enough to dare to
difturb the public fecurity.

The reader will find at the end of this chapter
all the prices of wheat which h&ve been collefted
by Fleetwood from 1202 to 1597, both inclufive,
reduced to the money of the prefent times, and
digefted according to the order of time, into
feven divifions of twelve years each. At the.
end of each divifion too, he will find the average
price of the twelve years of which it confifts. In
fliat long period of time, Fleetwood hks been
able to colled the prices of no more than eighty
years, ^o that four years are wanting to make out
the laft twelve years. I have added, therefore,
from the accounts of Eton Colkge, the prices of ^\^

1598, 15991 1^00, and i6ai. It is the only addi-
tion which I have made. The reader will fee, that
from the beginning of the thirteenth, till after the
middle of the fixteenth century, thg average price
oF each twelve years grows gradually lower dnd
lower } and that towards the end of the fixteenth
century it begin*- to rife again, ThkC priced,
indeed, which Fleetwood has been able to col-
Jei^, feem to bave be^n thofc Qhicfly which were

Vol, I, U remark-f

^90 * tHE NATURE AND CAUSES 6P

BOOK femarkabfe for extraordinary dcarneis or chcap--^
ni^fs ; and I do not pretend that any very certain
concliition can be drawn from them* Sa &£,
however, as they prove any thing at all, thqr
confirm the account which I have been endea^
vouring to give. Fleetwood himfclfi however,
fcems, with moft other writers, to have believed,
that during all this period the value of filver, ia
cpnfequenqe of its increafing abundance, wa5
continually diminiftiing. The prices of corn
which he himfelf has coUcftcd, certainly do not
agree with this opinion. They agree perfectly
with that of Mr. Dupre de St. Maur, and with
that which I have been endeavouring to exjdain.
Bifhop Fleetwood and Mr. Dupre de St. Maur
are the two authors who fcem to have coUcdedj
with the greateft diligence and fidelity, the prices
of things in ancient times. It is fomewhat curi-
ous that, though their opinions are fo very dif-
ferent, their fafts, fo far as they relate to the price
of corn at leaft, fliould coincide fo very exaftly.

It is not, however, fo much from the lo>^
price of corn, as from that of fome other parts
of the rude produce of land, that the moft judi-
cious writers have inferred the great value of
filver in thofe very, ancient times. Corn> it has
been faid,. being a fort of manufadture, . was, in
thofe rude ages, much dearer in proportion than
the greater part of other commodities; it is
meant, T fuppofe, th^n the greater paft of xm-
manufaftured commodities ; fiiqh as cattle, poul-
try, gajne of all kinds, &c# That in diofe times
gf goverty and barbariim thefe were ju-oportion-

*" . ably

THE WEALTH OF NATIONS. 291

iably much cheaper than corn, is undoubtedly chap,
true. But this chcapncS was not the e/Feft of
the high value df" filver, but of the low value of
thofe commodities. It was not becaufc filver
would in fuch times purchafe or reprefent a
greater quantity of labour, but becaufe fuch
comnlodities would purchafe or reprefent a much
Tmaller quantity than in tirpcs of more opulence
and improvement. Silver muft certainly be
cheaper in Spanifh America than in Europe ; in
the country where it is produced, than in the
country to which it is brought, at the expence of
a long carriage both by land and by fea, of a
freight and an infurance. One-and-twenty
pence halfpenny fterling, however, we are told
by Ulloa, was, not many years ago, at Buenos
Ayres, the price of an ox chofen from a herd of
three or four hundred. Sixteen fhillings fterling,
We are t6ld by Mr. Byron, was the price of a
good hbrfe in the capital of Chili. In a country
naturally fertile, but of which the far greater
part is altogether uncultivated, cattle, poultry,
game of all kinds,. &c. as they can be acquired
with a very fmall quantity of labour, fo they
will purdhafe or command but a very fmall quan-
tity. The low money price for which they may
be fold, is no proof that the real value of filver is
there very high, but that the real value of thofe
comnKxlities is very low.

Labour, it muft always be remembered, and
not any parocular commodity or fet of commo-
dities, is the real meafure of the value both of
filver and of all other commodities.

U 2 But

192 tHE NATtJRE AND CAUSES OP

BOOK But in countries almost wafte^ or but thinty
inhabited, cattle, poultry, game of all kinds^
&c. as they are the Ipontaneous productions of
nature^ fb fiie frequently produces them in much
greater quantities than the confumption of the
inhabitants requires. In fuch a ftate of things
the fupply commonly exceeds the demand. In
different ftates of fociety, in different ftages of
improvement, therefore, fuch commodities will
reprefent, , or be equivalent to, very different
quantities of labour.

In every ftate of fociety, in every ftagc of im-
provement, corn is the produftion of human in-
duftry. But the average produce of every fort
of induftry is always fuited, more or lefs -exaftly,
'to the average confumption; the average fupply
to the average demand. In every different ftage
of improvement, befides, ther^aifing of equal
quantities of corn in th^ fame foil and climatCj
will, at an average, require nearly equal quan-
tities of labour ; Or what comes to the feme
thing, the price of nearly equal quantities; the
continual increafe of the produ6tive powers of
labour in an improved ftate of cultivation,
being more or lefs counterbalanced by the con-
tinually increafmg price pf cattle, the principal
inftruments of agriculture. Upon all thefe ac-
counts, therefore^ .we may reft affured, that equal
quantities: of cei5f%:>^^ in every ftate of ibciecy>
in every ftage of improvement, more nearly re-
prefent, or be equivalent to, equal quantides of
labour, than equal quantities of any other part of
the rude produce of land. Corn> accordingly.

THE WEALTH OP NATIONS. - 2$3

It has already been obferved, is, in all the dif- chap.
fcrent ftages of wealth and improvennent, a more
accurate mcafure of value than any other com-
modity or fct of commodities. In all thofe dif-
ferent ftages, therefore, we can judge better of
the real value of filver, by comparing it with corn,
than by comparing it with any other connmodity,
or fet of commodities.

Cork, befides, or whatever elfe is the com-
mon and favourite vegetable food of the people,
conftitytes, in every civilized country, the prin-
cipal part of the fubfiftence of the labourer. In
confequence of the extenfion of agriculture, the
land of every country produces a much greater
quantity of vegetable than of animal food, and
the labourer cvery-where lives chiefly upon the
wholefomc food that is cheapeft and moft abun-
dant. Butchcr's-meat, except in the moft thriv-
ing countries, or where labour is moft highly
rewarded, makes but an infignificant part of hi«
fubfiftenecj poultry makes a ftill fmaller part of it,
and game no part of it. In France, and even in
Scotland, where labour is fomcwhat better re-
warded than in, France, the labouring poor fel-
dom cat butcher's-meat, except upon holidays,
and other extraordinary occafions. The money
price of labour, therefore, depends much more
upon the average money price of corn, the fub-
fiftence of the labourer, than upon that of but-'
chcr's-mcat, or of any other part of the rude
produce of land. The real value of gold and filver,
therefore, the real quantity of labour which they
can purchafe or coipmand, depends much more

U 3 vpon

294 THE NATURE ANI> CAUSES OF

BOOK upon the quantity of corn whidi they can purcha&
or command, than upon that of butcher's-meat;i
or any other part of the rude produce of land.

Such flight obfervations^ however, uppn t^e
prices either of corn or of other commoditxesi would
not probably have mifled fo niany ietelUgent
^uthorsi had they not been influenced, ^ thf
fame time, by the popular notion, that as th^
quantity of filver naturally increafes in every
country with t}]c increafe of wealth, fo its value
diminiihcs as its quantity increafes* This ^oidon^
however, feems to be altogether grourjdlefs.

The quantity of the precious metals may incre^
in any country from two different caufes : either^
firft, from Ae increafed abundance of the mines which
fupply it ; or, fecondly, from the increafed wealth
of the people, from, the increafed produce of their
annual labour. The firft of thefe caufes is no doubt
neceflarily conneded with the diminution of the value
of the precious metals ; but the fecond is not.

When more abundant mines are difcovered,
a greater quantity of the precious metals is
brought to market, and the quantity of the ne-
ceflaries and conveniencies of life for which they
muft be exchanged being the fame as befbrej
• equal quantities of the metals muft be exchanged
for fmaller quantities of commodities. So fer,
therefore, as the increafe of the quantity of the
precious metals in any country arifes from the in-
creafed abundance of the mines, it is neceflarily
connefted with fome diminution of their value.

When, on the tontrary, the wealth of any
country increafes, when th^ annual produ^ of

7 its

THE WEALTH OF NATIONS. * *9J

its labour bccomts gpaduaHy greater and greater, c h a p.
a greater quantity of coin becomes: neceflary in
order to circulate a greater quantity of conioio-
dities : and the people^ as they can afford it, as
they have more cornnaoditie^ to give for it, will
naturally purchafe a greater and a greater quan-
tity of plat«. The quantity of their coin will
incrcafc from neceffity; th^ quantity of their
plate froni vanity and oftentation, or from the
fame reafon that the quantity of fine ftatues,
pifturcs; and of every other luxury and curiofity,
is likely to jncreaf? among them. But as ftaju-
aries and painters are not likely to be worfe
rewarded in times of wealth and profperity, than
in times of poverty and depreffion, fo gold and
filvcr are not likely to be worfe p^id for.

The price of gold and fllver, when the acci^
dental diftovpry of more abundant mines does
not keep it down, as it naturally rifes with the
wealth of every country, fo, whatever be the?
ftate of the mines, it is at all times naturally
higher in ^ rich than in a poor country. Gold an4
filverji like all other commodities, naturally feek
the market where the beft price is given for them,
and the beft price is commonly given for every
thing in the country which can beft afford it.
Labour, it muft be* remembered, is tlie ultimate
price which is paid for every thiqg, and ;n coun-
tries where labour is equally well rewarded,
the money price of labour will be in proportion
to that of the fubiiftence of the labourer. But
gold and filver will naturally exchange for a
greater quantity of fubiiftence in ^ rich than in a

U 4 poor

296 THE NATURE AND CAUSES OF

■

BOOK poor country, in a country which abounds wi^
lubliftence, than in one which is but indiffer-
ently fupplied with it. If the two countries arc
at a great diftance, the difference may be very
great; bccaufc though the metals naturally fly
from the worfe to the better market, yet it may
be difficult to traniport them in fuch quantities
as to brii>g their price nearly^ to a level in both.
If the countries are near, the diffei:encc will be
fmaller, and may Ibmetimesi be fcarce percep-
tible; becaufe in this caie (he tranfportatioo
will be eafy. Chvia is a much richer country
thai)^ any part of Europe, ai\d the 4iffcrence be-
tween the price of fubfiftence in Qhina and io
Europe is very great. Rice in China is much
cheaper ' than wheat is any- where in Europe.
£ng1an4 is a much richer country than Scot-
Und; but the difference between the money-
price of corn in thofe two countries is much
fmaller, and is but juft perceptible. In propor-
tion to the qqantity or n^^afurc, Scotch corn
generally appears to be a good deal cheaper than
EngUfli; but in proportion to its quality, it is
certainly fomewhat dearer. Scotland receives
almoft every year very large fupplies from Eng-
land, and every commodity muft comn[ionly be
fomewhat dearer in the country to which it is
brought than in that from which it comes. Eng-
lifli cprn^ therefore, mjjft be dearer in Scot-
land than in England, and yet in proportion to
its quality, or to the quantity and goodnefs of
the (lopr or meal which can be made frpm it, it
cannot commonly be fold higher there than the

Scotch

THE WEALTH OP NATIONS. 297

Scotch corn which comes to market in competi- chap.
tion with it. ' • ' '

The difference between the money price oF
labour in China and in Europe, is ftill greater
than that between the money price of fubfift-
ence j becaufe the real recompence of labour is
higher in Europe than in China, the greater
part of Europe being in ah improving ftate,
while China feems to be (landing ftill. The
paoney price of labour is lower in Scotland than
in England, becaufe the real recompience of la-
bour is much lower; Scotland, though advan-
cing to greater wealth, advancing much more
flowly than England. The frequency of emi-
gration from Scotland, and the rarity of it from
England, fufficiently prove that the demand fcr
labour is very different in the two countries.
The proportion between the real recompence^ of
labour in different countries, it muft be remem-
bered, is naturally regulated, not: by then* aftual
wealth or poverty, but by their advancing, fta-
tionary, or declining condition.

Gold and filver, as they are naturally of the
greateft value among the richeft, fo they are na-
turally of the Icaft value among the pooreft na-
tions* Among favages, the pooreft of all na-
tions, they are of fcarce any value.

Itj great towns corn is always dearer tjiaa in
remote parts of the country. This, however, is
the effcdt, not of the real cheapnefs of filver, but
pf the real dearnefs of corn. It does^ not coft
lefs labour to bring filver to the great town than
to the rennqte parts of the country j but it cofts
^ great deal more to bring corn.

t^ . THE NATURE AND CAUSES OF

In feme very rich and commerciid countrieSji
fuch as Holland and die territory of Genoa> com
is dear for the iame reafon that it is dear in great
towns. They do not produce enough to main-^
tain their inhabitants. They arc rich in the in-
duftry and (kill of their artificers and manufac^
tuners ; in every fort of machinery which caii
facilitate and abridge labour; in (hipping, an4
in all the other inftruments and means of car-
riage and commerce : but they are poor in corn,
which, as it muft be brou^t to them frwn dif-
tant countries^ muft, by an additicm to its price^
pay for the carriage from thofe countries. It
docs not coft left labouf to bring filvcr to Am*
Aerdam than to Dantzick; but it cofts a great
deal more to bring corn. The real coft of filver
niuft be nearly the fame in both places; but
that of corn m^ft be very different. .Diminifh
the real opulence either of Holland or of the ter-
ritory of Genoa, while the- number of their inha-
bitants remains the fame : diminifh their power
of fupplying therafelves from diftant couotriesi^
and the price of corn, Ji^ead of finking with
that diminution in the quantity of their fiivcr,
which muft neceflfarily accompany this declenfioh
cither as ks caufe or as its cfFeft, will rife to
the price of a famine. When we are in want of
hecelTarics we muft part with all fupcrfiuities, of
which the value, as it rifes in times of opulence
and profperity, fo it finks in times of poverty and
diftrefs. It is otherwife with necefTarics* Their
real price, the ^quantity of labour which they can
purchafe or command, rifes in wm?s of poverty

THE WEAI^TH OF NATIONS. 2^^

and, diftreft, and finks ^n tiroes of Qpuknce and c h a p,
pro^rity, which are always cioies of great abun-
dance J for thef could no; ptherwife be tinnies of
opulence and profperity. Corn is a .neceffary^
lilver is only a fuperfluity.

Whatever, therefore, may have been the in-
creafe in the quantity of the precious metalsj^
which, during the period between the middle of
the fcurteenth and that of the fixteenth century,
^rofe from the increafe of wealth and improve-
jTient^ it could have no tendency to diminifh
their value either in Great Britain, or in any
other part of Europe, If thofe who have coU
lefted the prices of things in ancient times,
therefore, , had, during this period^ no reafon to
infer the diminution of the value of filver, from
any obfervations which they had made upon the
prices either of corn or of other commodities,
they had ftill lefs reafon to infer it from any fup-
pofed increafe of wealth and improvement.

Second Period;

U T how various foever may have been the
opinions of the learned concerning the pro-
grefs of the value of filver during this firft pe-
riod, they are unanimous concerning it during
the fecond.

From about 1570 to about 1640, during ^
period of about feventy years, the variation in
the proportion between the value of filver and
that of cQrn:^ held a quite oppofite courfe*. Sil-
ver

Seo THE NATURE AND CAUSES OF

^ Q o K y^j. fyj^]^ jjj jfg fg^j value, or would exchange
for a fmaller quantity of labour than before ^
and corn rofe in its nominal price, and'inftead of
being commonly fold for about vro ounces of
filvcr the quarter, or about ten • * iHngs of our
prefent money, came to be fold for fix and eight
ounces of filver the quarter, or about thirty and
forty {hillings of our prefent money.

The difcovery of the abundant mines of Ame-
rica, feems to have been the fole caufe of this
diminution in the value of filver in proportion to
that of corn. It is accounted for accordingly in
the fame manner by every body ; and there ne^
ver has been any difpute either about the faft, or
about the caufe of it. The greater part of
Europe was, during this period, advancing in
induftry and improvement, and the demand for
filver fnuft confequently have been increafing-
But the increafe of the fupply had, it feems, fo
far exceeded that of the demiand, that the value
of that metal funk confiderably. The difcovery
of the mines of America, it is to bef obferved^
does not feem to have had any very fenfible ef-
feft upon the prices of things in England till
^fter 1570; though even the mines of Potoli
had been difcovered more than twenty years
before.

From 1595 to i6ao, both incluQve, the*ave-
rage price of the quarter of nine bufhels of ther
beft wheat at Windfor market, appears from
the accounts of Eton College, to have been
2 L Ts. 6d. XT- From which fum, neglefting
the fraftion, and deducing a ninth, or 4 j. 7 d. 4,

the

^HE WEALTH OF KaTIONS. 301

the price of the quarter of eight bulhels comes out chap.
to have been i[/. 16 s. 10^.^. And from this
fum, ncglefting likewife the fraftion, and deduc-
ing a ninth, or 4^. id.-^, for the difference be-
tween the price of the beft wheat and that of the
middle wheat, ' the price of the middle whea;
comes out to have been about i /. 12 s. 8 ^. ~, or
about fix ounces and one-third of an ounce of
filver.

From 162 i to 1636, both inclufive, the ave-r
rage price of the fame meafurc of the beft wheat
at the fame market, appears, from the fame ac-
counts, to have been il. 10 s.; from which
making the like deduftions as in the foregoing
Cafe,- the average price of the quarter of eight
bufliels of middle wheat comes out to have been
I /. i^s^ 6d. or about feven ounces and two-
thirds of an ounce of filver.

Third Period.

• \

TJfiT WEEN 1630 and 1640, or about 1636,
the effcft of the difcovcry of the mines of
America in reducing the value of filver, appears
to have been completed, and the value of that
metal feems never to have funk lower in propor-
tion to that of corn than it was about that time«
It feems to have rifen fomewhat in the courfe of
the prefcnt century, and it had probably begun

to do fo even fome time before the end of the laft.

•

From 1637 to 1700, both inclufive, being the
fixty-four laft years pf the laft CMtury, tl)e ave-
rage

^1 *rHE NATURE AN& CAtJSltS OP

hook rage price of the quartcf of nine bufhels df th^
bell wheat at Windfbr market^ appears, from th^
fame accounts, to have been lA lis* od.-^;
which is only is, od.^ dearer than it had been
during the fixteen years before. But in the
courfe of thcfe fixty four years there Happened
two events which muft have produced a much
' greater fcarcity of corn than what the courfe o£
the fealbns would otherwife have occafioned, and
which, therefore, without fuppofing any further
reduftion in the value of filver, will 'much more
than account for this very fmall enhancement of
price.

The firft of thefe events was the civil war,
which, by difcouraging tillage and interrupting
commerce, muft have railed the price of corn
much above what the courfe of the fealbns
would otherwife have occafioned. It muft have
had this efFeft more or lefs at all the different
markets in the kingdom, but particularly at
thole in the neighbourhood of London, which
require to be fupplied from the greateft diftance*
In 1648, accordingly^ the price of the beft wheat
at Windfbr market, appears, from the fame ac-
counts, to have been 4/. 5 j. and in 1649 to have
been 4/. the quarter of nine bufhels. The ex-
cefs of thofe two years above 2/. 10^. (the ave-
rage price of the fixteen years preceding iSjy)
is 3/. 5 J.; which divided among the fixty-four
laft years of the laft century, will alone very-
nearly account for that fmall enhancement of
price which feems to have taken place in them.
/ Thefe, however, tho'ugh' the higheft, are by no

means.

• TUfe WHALTH t?P NATIONS. 3«j

meas^ die only high prices which feem to have c hap.
l?cen occafione^ by the civil wars.

The fecond event was the bounty upon the
cstponation gf cprn^ grianted in i688. The
bounty, it has been tfiQught by many people, by
encouraging tillage, may, in a long cqurfe of
years, have occafioned a greater abundance, and
confeqyently a greater cheapnefs of corn in the
home-market, than what would otherwiie have
taken place there. '^ How . far the bounty could
produce this efieft at any time, I fhall eKamine
hereafters I fhall only obferve at prefent, that
between 1688 md 1700^ it had not time to pro-
duce any fuch effeA^ During this fhort period
its only efFeft muft have been, by encouraging
the Qxpori^tion of the furplus produce of every
year, and thereby hindering the abundance of
one year from compenfating the fcarcity of an-
other, to raife the price in the home-market.
The fcarcity which prevailed in England from
1693 to 1699, both in clufivCj^ though no doubt
principally owing to the badnefs of the fcafons,
and,, therefore, extending through a confiderable
part of Europe, muft have been fbmewhat en-
hanced by the bounty. In 1699, accordingly, the
further exportation of corn was prohibited for nine
months*

There was a third event which occurred in
the cdurfe of the fame period, and which, though
it could not occafion any fcarcity of corn, nor>
p(^rhaps, any augmentation in the real quantity
of filver which was ufually paid for it, muft ne-
ceflarily have occafioned fome augmentation ir^

the

S04 ' THE lilAttJiE ANb <iAtJS6^ OP

the nominal fum. This event was the great d^^
bafcment of the filver coin, by clipping and
wearing. This evil had begun ih the reign of
Charles II. and had gone on continually increafl
ing till 1695 i at which tinie, as we may karii
fraca M£«.Lowndc^ the current (ilver coin was^
at an average, near five-and-twenty per cent,
below its ftandard value. But the nominal fticn
which conftitutes the market-price of every coin-
modity is neceflarily regulated, not fo much by
the quantity of filver, which, according to the
ftandard, ought to be contained in it, as by that
which, it is found by experience, actually is con-
tained in it. This nominal fum, therefore, is
neceflarily higher when the coin is much debafed
by clipping and wearing, than when near to its
flandard value.

In the courfe of the prefent century, the filver
coin has not at any time been more below its
ftandard weight than it is at prefent. But though
very much defaced, its value has been kept up by
that of the gold coin for which it is exchanged.
For though before the late re- coinage, the gold
coin was a good deal defaced too, it was lefs fb
than the filver. In 1695, on the contrary, the
value t>f the filver coin was not kept wp by the
gold coin 5 a guinea then commonly exchanging
for thirty fliillings of the worn and dipt fdvcr.
Before the late re-coinage of the gold, the price
of filver bullion was feldom higher than five
Ihillings and feven-pence an ounce, which is but
five-pence above the mint price. But in 1695,
the coitimon price of filver bullion was fix fliil-

lings

THE WEALTH OF NATIONS. " 3©5

iings and fiire-pence an ounce *> which is fifteen- chap.
pence above the mint price* Even before the ^^'
late re-coinage of the gold^ therefore, the coin>
gold and filver together, when compared with
filver bullion, was nqt fuppofed to be more than
eight per cent, below its ftandard value. In
1695, on the contrary, it had been fuppofed to
be near five-and-twenty per cent, below that
value. But in the beginning of the prefent cen*
tury, that is, immediately after the great re-
coinage in King William's time, the greater part
of the current filver coin muft have been ftill
nearer to its ftandard weight tlian it is at prefent.
In the courfe of the prefent century too there has
been no great public calamity, fuch as the civil
war, which could either difcourage tillage^ or in-
terrupt the interior commerce of the country.
And though the bounty which has taken place
through the greater part of this century, muft
always raife the price of corn fomewhat higher
than it otherwife would be in the adlual ftate of
tillage ; yet as, in the courfe of this century, the
bounty has had full time to produce all the good
efFefts commonly imputed to it, to encourage
tillage, and thereby to increafe the quantity of
corn in the home market, it may, upon the prin-
ciples of a fyftem which, jL ihall explain and, ex-
amine hereafter, be fuppofed to have done Ibme-
thing to lower the price of that commodity the
one way, as well as to r^ufe it the other. Iris
by many people fuppofed to have done more.

• Lowndes's EfTay on the Silver Coin, p. 63.

Vol. I. X In

3<56 THE NATURE AND CAUSES OF

B o o K III the fixty-four years of the prefent centurjf
accordingly, the average price of the quarter
of nine bulhcls of the beft whe^t at Wihdfor
market, appears, by the accounts of Et6n Col-
lege^ to have been 2/. OJr. 61/.4.I, which i&
about ten (hillings and fixpence, or moi-e thaa
five-and- twenty per cent, cheaper than it had
been during the fixty-four kft years of the lalt
century; and about nine IhiUings and fixpcnce
cheaper than it had been during the i^xteeii
years preceding 1636, when the difcovery of thi
abundant mines of America may be fuppofed td
have produced its full efFe£b; and about one
(hilling cheaper than it had been in the twenty-
fix years preceding i620i before that difcovery
can well be fuppofed to have produced its full
cffeft^ According to this account, the aVeragt
price of middle wheat, during thefe fixty-four
firft years of the prefent century, comes out to
have been about thirty-two (hillings the quarter
of eight bufliels.

The value of filver, therefore, fcems to have
rifen fomewhat in proportion to that of corn
during the courfe of the prefent century, and it
had probably begun to do fo even fomc time be-
fore the end of the laft.

Im 1687, the price of the quarter of nint
bulhels of the beft wheat at Windfor market was
I /. 5 X. 2d. the loweft price at which it h^d ever
been from 1595.

In 1688, Mr. Gregory King,^ a man fai^ous
for his knowledge in matters of this kind, efti-
mated the average price of wheat in. years 'of
•- Hioderate

HiiE Wealth of nations. ^ s&j

ftioderatc plenty to be to the grower 35. 6d. the c ha 9.
buihel^ pr eight-and-twenty Ihillings the quar-
ter. The grower's price I undcrftand to be the
fame with what is fometimes called the contract
pricey or fhe price at which a farmer contrails
for a certain number of years to deliver a certain
4^uantity of corn to a dealeh As a contra<5l of
this kind feves the farmer the expence and
trouble of marketing, the contraft price is gene-
rally lower than what is fuppofed to be the ave-
rage market price. Mr. King had judged eighc-
and-twenty {hillings the quarter to be at that tinic
the ordinary contract price in years of moderate
plenty. Before the fcarcity occafioned by the
late extraordinary courfe of bad feafons, it was,
I have been aflured, the ordinary contra^ price
in all (Common years.

In 1688 was granted the parliamentary bounty

upon the exportation of corn. The country

gentlemen, who then compofed a ftill greater

proportion of the legiflature than they do at pre-

fent, liad felt that the money price of- corn was

falling. The bounty was an expedient to raife

it artificially to the high price at which it had

frequently been fold in the times of Charles L

dnd II. It was to take place, therefore, till

'wheat was fo high as forty-eight fhiliings the

•quarter; that is twenty ihillings, or ^ths dearer

"than Mr. King had in that very year eftimated

the grower's price to be in times of moderate

plenty; If his calculations deferve any part of

• the reputation which they have^ obtained very

'uhiverfally/ eight-and-forty- Ihillings the quarter

X 2 was

308 THE NATURE AND CAUSES OF

BOOK was a price which, without fome fuch expedient
^' as the bounty, could not at that time be expeft--
ed, except in years of extrao- dinary fcarcity.
But the government of King William was not
then fully fettled^ It. was in no condition to re-
fufe iny thing to the country gentlemen, from
whom it was at that very time foliciting the firft..
cftabliihment of the annual land-tax.

The value of filver, therefore, in proportion
to that of corn, had probably rifen fomewhat be-
fore the end of the laft century -, and it feems to
have continued to do fo during the courfe of thq,
greater part of the prefent ; though the neceflary
operation of the bounty muft have hindered that
rife from being fo fenfiBle as it otherwife would
have been in the aftual date of tillage.

In plentiful years the bounty, by occafioning
an extraordinary exportation, neceffarily raifes
the price of corn above what it otherwife would
be in thofe years. To encourage tillage, by
kieping up the t)rice of corn even in the moft
plentiful years, was the. avowed end of the infti*

tution*

In years of great fcarcity, indeed, the bounty
has generally been fufpcnded. It muft, however,
have had fome effeft upon the prices of many of
thofe years. By the extraordinary exportation
which it occafions in years of plenty, it muft
frequently hinder the plenty of one year from com*
^enfating the fcarcity of another.

Both in years of plenty and in years of fcar-
city, dierefore, the -bounty raifes the price of
-corn above what it naturally would be in the

a6tual

THE WEALTH OF NATIONS. 309

.adlual ftate of tillage. If, during the fixty-four chap.
flrft years of the prefent century, therefore, the
iwerage price has been lower than during the
fixty-four laft years of the laft century, it muft,
in the fame ftate of tillage, have been much more
fo, had it not been for this operation of the
bounty.

Put without the bounty, it may be fajd, the
ftate of tillage woujd not h^ve been the fame.
What jnay have been the effedtp of this irlftitu-
tion upon the agriculture of the country, I fhall
endeavour to explain hereafter, when I come lo
treat particularly of bounties. I fhaH only ob-
fcrve at prefent, that this rife in the value of
filver, in proportion to that of corn, has not
been peculiar to England. Jt has been obfcrved
to have taken place in France during the fam^
period, and nearly in the fam? proportion too,
by threp very faithful, diligent, and laborious
coUeftors of the prices of corn, Mr, Dupre de
St. Maur, Mr. Mefiance, and the author of the
Eflay on the police of grain. But in France,
till 1764, the exportation of grain was by law
prohibited; and it is fomewhat difficult to fup-
pofe, that nearly the fame diminution of price
which took place in one country, notwithftand-
ing this prohibition, Ihould in another be owing
to the extraordinary encouragement given to ex-
portation.

It would be more proper^ perhaps^ tp cpnfider
tjiis variation in the average money price of corn
as the effeft rather of fome gradual rife in the
real value of filver \n tl^e European market,

X 3 than

3CIO THE NATURE AND CAUSES OP

F o o K. than of any fall in the real average value of corn,
_^^ > Corn, ir has already been' obferVed, is at diftant
periods of time a more accurate meafurc of value
than either »filver, or perhaps* any other commo-
.^ty. When; aftdr the difcovery of the abundant
mines of America, corn rofe to three and four
times its former rhoncy price, this change was
liniverfally afcribed, not to any rife in the real
value of corn, but to a fall in the real value of
filver. If during the fixty-four firft years of the
prefent century, therefore, the average money
price of corn has fallen fomewhat below what it
had been during the greater part of the laft cen-
tury',' we Ibould in the fame manner impute this
change, not to any fall in the real value of corn^
but to fome rife in the real value of filver in the
European market.

The high price of corn during thefe ten or
twelve years paft, indeed, has occafioned a ftilpicion
that the real value of filver ftill continues to fall
in the European market. This high price of
corn, however, feems evidently to have been the
effect of* thd extraordinary unfavourablenefs of
the fe^fbns, and ought therefore to be regarded,
ilot as a perrrianent; but as a tranfitory and oc-
cafional eveht.r The feafons for thefe ten or
twelve years paft have been unfavourable through
the greater part of Europe; and the diforders
of Poland have very much increafed the fcarcity
in all thoft countries,' which, in dear years, ufed
to be fupplied from that market. So long a(
courfe of bad feafons, though not a very common
eveqt, is by no m^ans a Angular one^ and whoever

THE'^VEALTH OF NATIONS.

5^i

has enquii^cd much into the hiftory of the prices c h 4 p.
of corn in fornier times, will be at no lofs to re-
coiled feveral other examples of the fame klnd^
Ten years of extraordinary fcarcity^' befides, are
not more wonderful than ten years of extraordi-
nary plenty. The low price of corn from 1741
to 1750, l^oth inclufive, may very well be fee in
oppofition to its high price during thefe lafl:
eight or ten years. From 174 1 to 1750, ^the
.average price of tfie quarter of nine bufhels qf
the beft wheat at Windfor market, it appears
from the accounts of Eton College, was only
iL 13 J. 9^. yj which is nearly 6 j. 3//. below the*
average price of the fixty-four firft years of the
prefent century. The average price of thp
quarter of eight bufliels of middle wheat, comes
out, according to this account, to have beei]>
diiring thefc ten years, only 1 1^ 6 s. i J,

Between 1741 and 1750, however, the bounty
muft h^ve hindered the price of corn from fall-
ing fp low in the home market as it naturally
would have done, ^ During thefe %Q{\ years this
quantity of all forts of gr^in exported, it appears
frorn the puftqm-hov/e.bopkgj ampufited to po lefs
tha^n $ight. millio^is twentyrflipe thoufand one
hundred and fifty-fix qyarters. one Ijufliel. The
bounty paid for this ampurrted to 1,514,962/.
J 7 J. 4/1, In .1749 accordingly, Mr. Pelham,
gt that timis prirne rninifter, obferved to the
Houfe of Cornn)ons, thjit ^ for the three years
.preceding, ^ yery^ extraordinary fum had been
paid as bounty for the exportation of corn.

X 4 He

3i« THE NATURE. AND CAUSES OP

BOOK He had good reafbn to make this obfervation,
and in the following year he might have had ftill
better. In that fingle year the bounty paid
amounted to no lefs than 324,176/. loj, 6^.*
It is unneceflary to obftrve how much this
forced exportation muft have raifed the price of
corn above what it otherwife would have been in
the home market.

At the end of the accounts annexed to this
chapter the reader will find the particular ac-
count of thofe ten years feparated from the reft.
He will find there too the particular account of
the preceding ten years, of which the average is-
likewife below, though not fo much below, the
general average of the fixty-four firft years of the
century. The year 1740, however, was a year of
extraordinary fcarcity. Thefe twenty years pre-
ceding 1750, may very well be fet in oppofition
to the twenty preceding 1770. As the former
were a good deal below the general average of
the century, notwithftanding the intervention
of one or two dear years 5 fo -the latter have been
a good deal above^ it, notwithftanding the in-
tervention of one or two cheap ones, of 1759,
for example. If the former have not been as
much below the general average, as the latter
have been above it, we ought probably to im-
pute it to the bounty. The change has evidently
^ been too fudden to be afcribed to any change in
the value of filver, which is always flow and
gradual. The fuddenncls of the efiesA can bp

f Sec Tradls on the Qorn Trade ; Trad ^d.

Recounted

THE WEALTH DF NATIONS. : 313

accounted for only by a caufe which can operate chap.
fuddenly, the accidental variation of the feafon^.

The money price of labour in Great Britain
hasj indeed, rifen during the courfe of the prefcnt
Century. This, however, feems to be the efFc6t,
not fo much of any diminution in the value of
filver in the European market, as of an incrcafc
in the demand for labour in Great Britain, arifing
from the great, and almoft univerfal profperity
of the country. In France,- a country not alto-
gether io profperous, the money price of labour
has, fince the middle of the laftr century, beea
obferved to fink gradually with the average
money price of corn. Both in the laft century
and in the prefent, the day-wages of comoion
labour are there faid to have been pretty unit
formly about the twentieth part of the average
price of the feptier of wheat, a meafure which
contains a little more than four Winchefter
bulhels. In Great Britain the real recompence
of labour, it has already been ihown, the real
quantities of the nec^fl^ries and conveniencies of
life which are given to the labourer, has in-
crcaftd confiderably during the courfe qf the
prefent century. The rife in its money ^ price
feems to have been the cffeft, not of any diiuinu-
tion of the value of filver in the general iiiarket
of Europe, but of a rife in the real price of la-
bour - in the particular market of Great Britaio,
,pwing to the peculiarly happy circvmfta^ces
Qf the country.

For fome time after the firft difcovery of
America, filver w6\ild continue to fell at its

fornri^r.

9^4 THE NATURE AND CAUSES OF

BOOK former, or not much below its former price.
The profits of mining would for fome tim^
be very great, and much above their natural
rate. Thofe who imported that metal into
Europe, however, would loon find that the
whole, annual importation could not be difpoied
of at this high price. Silver would gradually
exchange for a finaller and a fmallcr quantity of
goods. Its price would link gradually lower an4
lower till it fell to its natural price ; or to what
was jiift fulKcient to pay, according to their na-
tural rates, the wages of the labour, the profits
of the ftock, and the rent of the i^nd, which
muft be paid in order to bring it. from the mine
to the market. In the greater part of the. filver
mines of Peru, the tax of the king of Spain,
anK>unting to a tenth of, the grofe produce, cats
up, it has already been obferved, the whole rent
of the land. • This tax was origiaally a half j
it foon afterwards fell to a third, then ^ to. a £fth,
and at laft to a tenth, at which rate jt.ftill con-i^
tinues. In tlie greater part of the iilver mines
of Peru, thisj it fecms, is all that':reniains, after
replacing the:) ftock of the undertaker of the
work, together' with its ordinary .profitSi arid it
fcems to beiunivcrfally acknowledged that thefe
profits, which were once very thigh, are now as
low as thry can well -be; iconfiftently with carry-
ing on their works. .

The tax of 'the king of Spain was reduced to
a fifth part of the regiftered filver in 1 504*, one^

I .

* Solorzanp, vol. ii.

and-

THE WEALTH .OP NATIONS.

3^5

and-forty yia^s before i545j the date of the dif- ^ ha p.
covery of the mines of Potofi. In the courfe of
ninety years, or before 1636, thefe mines, the
moft fertile in all America, had time fufficient
to produce their full efFeft, or to reduce the
value of filver in the European market as low as
it could well fall, while it continued to pay this
tax to the king of Spain. Ninety years is time
fufficient to reduce any commodity, of which
there is. no monopoly, to its natural price, or to
the lowefti price at which, while it pays a parti-
cular tax, it can continue to be fold for any x:on-^
jRderabk time together. , . -

The price of filver in the European market
might perhaps have fallen (till lower, and it
might have become neceffary either to reduce the
tax upon it, not only to one tenth, a^ in 1736^
but to one twentieth, in the fame manner as that
upon gold, or to give up working the greater
part of the American niines which are noisr
wrought. The gradual increafe of the demand
for filver, or the gradual enlargement of the
market for the produce of the filver mines c^
America, is probably the caufe which has pre-
vented this from happening, and which has not
only kept up the value of filver in the European
market, but has perhaps even raifed it fome-
what higher than it was about the middle of the
lafl: century.

Since the firft difcovery of America, the
market for the produce of its filver mines hals
•been growing gradually more and moiie exten-
0ve.

First,

3i6 THE NATURE AND CAUSES OF

BOOK First, The market of Europe has become
gradually more and more cxtenfive. Since the
difcovery of America, the greater part of Europe
has been much improved. England, Holland^
France, and Germany ; even Sweden, Denmark,
and Ruflla, have all advanced coniiderably both
in agriculture and in manufactures. Italy ieems
not to have gone backwards. The fall of Italy
preceded the conqueft of Peru. Since that time
it feems rather to have recovered a little. Spain
and '"Portugal, indeed, are fuppofed to have
gone backwards. Portugal, however, is but a
very fmall part of Europe, and the decleofion of
Spain is not, perhaps, io great as is commonly
imagined. In the beginning of the fixteenth
century, Spain was a very poor country, even in
comparifoQ with France, which has been fo
ITfiuch improved fince that tin^e. It was the
vf^ll-known remark of th^ Emperor Charles V.
who had travelled fo frequently tlirough both
countries, that every thing abounded in France,
but that every thing was wanting in Spj^in. Th^
increafing produce of the agriculture and manq-
.fadures of Europe niuft neccffarily have require^
a gradual increafe in the quantity of filver coip
to circulate it 5 and tht increafing number of
wealthy individuals muft have required the like
increafe in the quantity of their plate and oth^r
ornaments of filver.

Secondly, America is itfelf a new market for
.the produce of its own filver mines -, and as its.
advance^ in agriculture, induftry, and popula*
tion, arc much more rapid than thofe pf the ipoft

thriving

THE WEALTH OF NATIONS. ' 317

thriving countries in Europe, its demand muft chap,
increafc much more rapidly. The Englifli co-
lonies are altogether a new market, which partly
for coin and pardy for pkte, requires a conti-
nually augmenting fupply of filver through a
great continent where there never was any de-
mand before. The greater part too of tlie
Spanifti and Portuguefc colonics are altogether
new markets. New Granada, the Yucatan, Pa-
raguay, and the Brazils were, before difcovcrcd
by the Europeans, inhabited by favage nations,
who had neither arts nor agriculture. A con-
fiderable degree of both has now been introduced
into all of them. Even Mexico and Peru,
though they cannot be confidered as altogether
new markets, are certainly much more excen-
five ones than they ever were before. After all
the wonderful tales which have been publlfhed
concerning the iplendid ftate of thofe countries
in ancient times, whoever reads, with any de-
gree of fober judgment, the hiftory of their firft
difcovery and conqueft, will evidently difcern
that, in arts, agriculture, and commerce, their
inhabitants were much more ignorant than the
Tartars of the Ukraine are at prefent. Even the
Peruvians, the more civilized nation of the two,
though they made ufe of gold and filver as orna-
ments, had no coined money of any kind. Their
whole commerce was carried on by barter, and
there was accordingly fcarce any divifion of la-
bour among them. Thofe who cultivated the
ground were obliged to build their own houfcs,
to make their own hai'fliold furniture, their ov^

clothes.

$id

Ttt£ NATURE AND CAUSES OP

B o o K clothes, fhoes, and inftruments of agriculture^
The few artificers among th^m are faid to have
been all maintained by the fovereign, , the nobles j
and the pricfts, and were probably their fervants
or flavcs. All the ancient arts of Mexico and
Peru have never furnifhed one fingle manu-
fadiure to Europe. The Spanilh armies, though
they fcarce ever exceeded five hundred men, and
frequently did not amount to half that number,
Ibund almoft cvery-where great difficulty in pro-
curing fubfiftence* The famines which they are
faid to have occafioncd almoft wherever they
went, in c<)urttries too which at the fame time
Are reprefented as very populous and well-culti-
vated, fufficiently demonftrate that the ftory of
this populoufnefs and high cultivation is in a
great meaftire fabulous. The Spanifli ^colonies
are under a goviernment in many refpefts left
favourable to agriculture, improvement and po*-
pulatioa, than that of the Englifli colonies.
They feem, however, to be advancing in all
thcfe much more rapidly than any country in
Europe. In a fertile foil and happy climate,
the great abundance and cheapnels of landj a
<:ircumftance common to all new colonies, is^ it
feertis, fo* great an advantage as to compenfate
many defefts in civil government. Frezier, who
vifited Peru in 17 13, reprefents Lima as con-
taining between twenty-five and twenty-eight
thoufand inhabitants. Ulloa, who reftded ' iA
the fame country between 1740 and 1746, repre-
•fents it as containing more than fifty thoufand.
The difference in their accounts of the populouf-

5 neft

THE WEALTH OF NATIONS. ^ 515

iiefs of feveral other principal towns in Chili and c h a r.
Peru is nearly the fame ; and as there feems to be
no reafon to doubt of the good information of
cither, it marks an increafe which is fcarce inferior
to that of the E.nglifli colonies. -America, there-
fore, is a new market for the produce of its own
filver ihines,' of which the demand muft increafe
mlich more rapidly than that of the moft thriving
countryin Europe.

THiRbLY, The Eaft Indies is another market
for the produce of the filver mines of America^
and a market which, from the time of the firft
^ifcovery of thofe mines, has been continually
taking off a greater and a greater quantity of
filver. Since that time, the direft trade be-
tween America and the Eaft Indies, which is
carried on by meians of the Acapulco fhips, has
been continually ' augmentihgj and the indired:
intercourfe by the way of Europe has been aug-
menting in a ftill greater proportion. During
the I^xteenth century, the Portuguefe were the
only European nation who carried on any regu-
lar trade to the Eaft Indies. In the laft years of
that century the Dutch began to encroach upon
this tnonopoly, and in a few years expelled them
from their principal fettlements in India. During
the greater part of the laft century thofe two na-
tions divided the moft corifiderable p^rt of th^.
Eaft India trade between them; the trade of the
Dutch continually augmenting in a ftill greater
proportion than that of the Portuguefe declined.
The Eriglifli and French carried on fome trade

with

3«o THE NATURE AN> CAUSES Of

BOOK With India in the laft century, but it hak b^crf
I . *

greatly augmented in the courfe of the prc-

fcnt. The Eaft India trade of the Swedes and
Danes began in the courfe of the prefent cen-
tury. Even the Mufcovites now trade regularly
with China by a fort of caravans which go over
land through Siberia and Tartary to Pekin. The
Eaft India trade of all thefe nations, if we except
that of the French, which the laft war had well
nigh annihilated, has been almoft continually
augmenting. The increafmg confumption of
Eaft India goods in Europe is, it feemsy fo great,
as to afford a gradual increafe of employment to
them all. Tea, for example, was a drug very
little ufed in Europe before the middle of the laft
century. At prefent the value of the tea an-
nually imported by the Englifti Eaft India Com-
pany, for the ufe of their own countrymen,
amounts to more than a million and a half a
year i and even this is not enough ; a great deal
more being conftantly fmuggled into the coun-
trj^ from the ports of Holland, from Gotten-
burg in Sweden, and from the coaft of France
too> as long as the French Eaft India Company
was in profperity. The confumption of the
porcelaif\ of China, of die fpiceries of the Moluc-
cas, of ^ife piece goods of Bengal, and of innu-
merable mother articles, has incrcafed very nearly
in aJik^ proportion. The tonnage accordingly
of all the European Ihipping employed in the
Eaft India trade, at any one time during the laft
century, was not, perhaps, much greater than

that

THE WEALTH OF NATIONS.* 321,

tliat of the Eftgliflht Eaft India Company before c hap,
the late reduftion of their fhipping.

But in the Eaft Indies, particularly in China
and Indoftan, the value of the precious metals,
when the Europeans firft began to trade to thofe
countries, was much higher than in Europe;
and it ftill continues to be fo. In rice countries,
vhich generally yield two, fometimes three crops
in the year, each of them more plentiful than any
common crop of corn, the abundance of food
muft be much greater than in any corn country
of equal extent. Such countries are accord-
ingly much more populous. In them too the
rich, having a greater fuper-abundance of food
to dilpofe of beyond what they themfelves can
confume, have the means of purchafing a
much greater quantity of the labour of other
people. The retinue of a grandee in China or
Indoftan accordingly is, by all accounts, much
more numerous and fplendid than that of the
richeft fubjeds in Europe. The fame fuper-
abundance of food, of which they have the dif-
pofal, enables them to give a greater quantity
of it for all thofe fingular and rare produftions
which nature furnilhes but in very fmall quan-
tities; fuch as the precious metals and the pre-
cious ftones, the great objefts of the competi-
tion of the rich. Though the mines, therefore,
which fupplied the Indian market had been as"
abundant as thofe which fupplied the European,
fuch commodities would naturally exchange for
a greater quaiyity of food in India than in Eu-
rope. But ,the mines which fupplied the Indian

Vol. I. Y /market

p^ THE NATtJRE AUt^ CAtfSfiS 6P

BOOK market with the precious metals fcem to h^V6
been a good deal lefs abundant, and thofe which
fupplicd it with the precious ftones a good deal
more Coj than the mines which fupplied the
European. The precious metals, therefore,
would naturally exchange in India for fomewhat
a greater quantity of the precious ftones, and for
a much greater quantity of food than in Europe,
The money price of diamonds, the greateft of all
fuperftuities, would b^ fomewhat lower, and that
of food, the firft of all neceflaries, a great deal
lower in the one country than in the other. But
the real price of labour, the real quantity of the
neceffaries of life which is given to the labourer,,
it has already been obferved, is lower both in
China and Indoftan, the two great markets of
India, than it is through the greater part of
Europe. The wages of the labourer will there
purchafe a fmaller quantity of food j and * as the
money price of food is much lower in India than
in Europe, the money price of labour is there
lower upon a double account j upon account
both of the fmall quantity of food which it will
purchafe, and of the low price of that food. But
in countries of equal art and induftry, the money
price of the greater part of manufactures will be
in proportion to the money price of labour ; and
in manufacturing art and induftry, China and
Indoftan, though inferior, feem not to be much
inferior to any part of Europe. The money
price of the greater part of majiofa&ures, there-
fore, will naturally be much lower in thofe great
empires than it is any-whcre in Europe. Through

- Ae

THfe WEALTH OF NATIONS. 325

llmt greatel- part of Europe too the expence of 6 hap.
land-carriage increafes very much both the real
land nominal price of molt manufaftures. It
cofts more labour, and therefore more money, t6
bring firft the materials, and afterwards the cofrt-
plete manufafture to market. In China and In-
doftan the extent and variety of inland naviga-
tions fave the greater part of this labouf, and
confequently of this nioney, and thereby reduce
ilill lower both the real and the nominal price of
the greater part of their manufaflures. Upon
all thefe accounts, the precious metals are a com-
modity which it always has been, and ftill con-
tinues to be, extremely advantageous to carry
from Europe to India. There is fcarce any
commodity which brings a better price there;
or which, in proportion to the quantity of la-
bour and commodities which it cofts in Europe,
will purchafe or command a greater quantity of
labour and commodities in India. It is more
advantageous too to carry filver thither than
gold y becaufe in China, and the greater part of
the other markets of India, the proportion be-
tween fine filver and fine gold is but as ten, or
at moft as twelve, to one ; whereas in Europe it
is as fourteen or fifteen to one. In China, and the
greater part of the other markets of India, ten, or
at moft twelve, ounces of filver will purchafe an
ounce of gold : in Europe it requires from four-
teen to fifteen ounces. In the cargoes, therefore,
of the greater part of European fhips which fail to
India, filver has generally been one of the moft
valuable articles. It is the moft valuable article in-

Y 2 the

SH THE NATURE AND CAtFSES OF

B o o K the Acapulco Ihips which fail to Manilla. The
filver of the new continent feems in this manner to
be one of the principal commodities by which the
commerce between the two extremities of the old
one is carried on, and it is by means of it> in a
great meafure, that thofe diftant parts of the
world are connefted with one another.

In order to fupply lb very widely extended a
market, the quantity of filver annually brought
from the mines muft not only be fufficient to
fupport that continual increafe both of coin and
of plate which is required in all thriving coun-
tries; but to repair that continual wafte and con-
fumption of filver which takes place in all coun-
tries where that metal is ufed.

The continual confumption of the precious
metals in coin by wearing, and in plate both by
wearing arid cleaning, is very fenfible ; and ia
commodities of which the ufe is fo very widely
extended, would alone require a very great an-
nual fupply. The confumption of thofe metals
in fome particular manufactures, though it may
not perhaps be greater upon the whole than this
gradual confumption, is, however, ' much more
fenfible, as it is much more rapid. In the ma-
nufaftures of Birmingham alone, the quantity of
gold and filver annually employed in gilding and
plating, and thereby difqualified fi-om ever after-
wards appearing in the fhape of thofe metals, is
faid to amount to more than fifty thoufand
pounds ftexling. We may from thence form
Ibme notion how great mufl: be the annual con-
iumption in all the dilFerent parts of the worlds

either

THE WEALTH OF NATIONS* " 3«5

cither in manufaftures of the fame kind with chap.
thofe of Birmingham, or in laces, epibroideries,
gold and filver ftufFs, the gilding of books, fur-
niture, &c. A confiderable quantity too muft
be annually loft in tranfporting thofe metals from
one place to another both by fea and by land.
In the greater part of the governments of Afia>
befides, the almoft univerfal cuftom of con-
cealing treafures in the bowels of the earth, of
which the knowledge frequently dies with the
perfon who makes the concealment, muft occa-
fion the lofs of a ftill greater quantity.

The quantity of gold and filver imported at
both Cadiz and Lifbon (including not only what
comes under regifter, but what may be iuppofcd
to be fmuggled) amounts, -according to the beft
accounts, to about fix millions fterling a year.

According to Mr. Meggens * the annual im-
portation of the precious metals into Spain, at an
average of fix years; viz. from 1748 to 1753,
both inclufive ; and into Portugal, at an average
of fcven years; viz. from 1747 to 1753, both
inclufive ; amounted in filver to i , i o i , 1 07
pounds weight; and in gold to 49,940 pounds
weight. The filver, at fixty-two (hillings the
pound Troy, amounts to 3,413,431 /. 10 s. fter-
ling. The gold, at forty-four guineas and a

• Poftfcript to the Univerfal Merchant, p. 15 and 16.
This Poftfcript was not printed till 1756, three years after th^
pablication of the book, which has never had a fecond edi-
tion. The poftfcript is, therefore^ to be found in few co-*
pies : It corrects feveral errors in the book.

. Y 3 half

3t6 THE ^NATURE AND CAUSES OF

BOOK half the pound Troy, amounts to 2,333,446/. i4\r,
fterling. Both together antount to 5,746,878 /. 4 j:,
fterling. The account of what was inciportcd
under regifter, he affurcs us is cxaft. He gives,
us • the detail of the particular places from which
the gold and filver were brought, and of the par-
ticular quantity of each metal, which, according
to the regifter, each of them afforded. He
makes an allowance too for the quantity of each
metal which he fuppofes may have been fmug-
glcd. The great experience of this judicious
merchant renders his opinion of confiderablo
weight.

According to the eloquent and, fometimcs,
well-informed Author of the Philofophical
and Political Hiftory of the Eftabliihment of
the Europeans in the two Indies, the annual
importation of regiftered gold and filver into
Spain, at an average of eleven years ; viz. fronv
^7^4 to 1764, both inclufiyej amounted to,
13,984,1854 piaftres of ten reals. On account
of what may have been fmuggled, however,^
the whole anniial importation, he fuppofes, may"
have amounted to feventeen millions of pi-
aftres J which, at 4 s. 6 d. the piaftre, is equal
to 3,825,000/. fterling. He gives the detail toa
of the particular places from which the gold arifd
filver were brought, and of the particular quan-
tities of each metal which, according to the re-
gifter, each of them afforded. He infornxs us
too, that if we were to judge of the quantity of
gold annually imported from the Brazils into
Lift>oh by die amount of the tax paid to the

king.

' THE WEALTH OF' NATIONS. 597

king of Portugal, which it feems is one-fifth of c h^a p,
• the ftandard metal, we might value it at eighteen
millions of cruzadoes, or forty-five millions of
Frerich livres, equal to about two millions fter-
ling. On account of what may have been fmug-
gled, however, we may fafely, he fays, add to
this fum an eighth more, or 250,000/. fterling,
fo that the whole will amount to 2,250,000/.
fterling. According to this account, therefore,
the whole annual importation of' the precious
metals into both Spain and Portugal, amounts to
^bout 6,075,000/. fterling.

Several other very well authenticated, though
manufcript, accounts, I have been affured, agree, '
in making this whole annual importation amount
'at an average to about fix millions fterling-
fometimes a little more, fometimes a little Icfs.

The annual importation of the precious metals
' into Cadiz and Lift^on, indeed, is not equal to '
the whole annual produce of the mines of Ame-
rica. Some part is fent annually by the Aca-
pulco Ihips to Manilla i fome part is employed
in the contraband trade which the Spanifti colo-
nies carry on with thofe of other European na-
tions; and fome part, no doubt, remains in the
country. The mines of America, befides, are
by no means the only gold and filver mines in
the world. They are, however, by far the moft
abundant. The produce of all the other mines
which are known, is infignificant, it is acknow-
ledged, in comparifon with theirs; and the far
greater part of their produce, it is likewife ac-
knowledged, is annually imported into Cadiz.

Y 4 ^nd

528 THE NATURE AND CAUSES OP

BOOK and Liibon. But the conflimption of Birming-^
ham alone, at the rate of fifty thoufand pounds a
year, is equal to the hundred-and-twentieth part
of this annual importation at the rate of fix mil-
lions a year. The whole annual confumption of
gold and filver, therefore, in all the different
countries of the world where thofe metals are
ufed, may perhaps be nearly equal to the whole
annual produce. The remainder may be no
more than fufficient to fupply the increafing de-
mand of all thriving countries. It may even have
fallen fo far fhort of this demand as fomewhat to
1-aife the price of thofe metals in the European
market.

The quantity of brafs and iron annually
brought from the mine to the market is out of
all proportion greater than that of gold and fil-
ver. We do not, however, upon this account^
imagine that diofe coarfe metals are likely to
multiply beyond the demand, or to become
gradually cheaper and cheaper. Why fliould we
imagine that the precious metals are likely to do
fo? The coarfe metals, indeed, though harder,
are put to much harder ufes, and, as they are of
lefs value, lefs care is employed in their prefer-
vation. The precious metals, however, are not
neceffarily immortal any more than they, but are
liable too to .be loft, wafted, and confumed in a
great variety of ways.

The price of all metals, though liable to flow
and gradual variations, varies lefs from year to
year than that of almoft any other part of the
rude produce of landj and the price of' the pro-
clous

THE WEALTH OF NATIONS. . 329

cious metals is even lefs liable to fudden vari- chap,
ations thgn that of the coarfe ones. The durable-
nefs of metals is the foundation of this extraordinary
fteadinefs of price. The corn which was brought
to market laft year, will be all or almoft all con-
fumed long before the end of this year. But fomc
part of the iron which was brought from the mine
two or three hundred years ago, may be ftill in
ufe, and perhaps fome part of the golci which was
brought from it two or three thoufand years ago.
The different maffes of corn which in different
years muft fupply the confumption of the world,
will always be nearly in proportion to the refpeftive
produce of thofe different years. But the propor-
tion between the different maffes of iron which
may be in ufe in two different years, will be very
little affefted by any accidental difference in the
produce of the iron mines of thofe two years ; and
the proportion between the maffes of gold will be
ftill lefs affefted by any fuch difference in the pro-
duce of the gold mines. Though the produce of
the greater part of metallic mines, therefore, varies,
perhaps, ftill more from year to year than that of
the greater part of corn-fields, thofe variations
have not the fame effeft upon the price of the one
Ipecies of commodities, as upon that of the othen

Variaiiotts

350 THE NATURE AND CAUSES OF

BOOK

■•^^ Variations in the Proportion between the reffeSive

Values of Gold and Silver.

J3EFORE the difcovery of the mines of
America, the value of fine gold to fine filvcr
was regulated in the difierent mints of Europe,
between the proportions of one to ten and one to
twelve I that is, an ounce of fine gold was liip-
pofed to be worth fi-om ten to twelve ounces of
fine filver. About the middle of the laft century
it came to be regulated, between the proportions
of one to fourteen and one to fifteen i that is, an
ounce of fine gold came to be fuppofed worth
between fourteen and fifteen ounces of fine filver.
Gold rofe in its nominal value, or in the quan-
tity of filver which was given for it. Both me-
tals funk in their real value, or in the quantity
of labour which they could purch^e; but filver
funk more than gold. Though both the golcj
and filver mines of America exceeded in fertility
all thofe which had ever been known before, the
fertility of the filvcr mines had, it feems, beea
proportionably ftill greater than that of the gold
ones.

The great quantities of filver carried annually
from Europe to India, have, in fome of the
Englifh fettlements, gradually reduced the value
. of that metal in proportion to gold. In the mint
of Calcutta, an ounce of fine gold is fuppofed to
be worth fifteen ounces of fine filver, in the fame
manner as in Europe. It is in the mint perhaps
rated too high for the value which it bears in the

market

• THE WEALTH OF NATIONS^ 331

market of Bengal. In China, the proportion of c h a p;
gold to filyer ftill continues as one to ten, or G;%
to twelve/ In Japan, it is faid to be as One
po eight.

The proportion between the quantities of gold
^nd filver annually imported into Europe, ac^
cording to Mr. Meggens's account, is as one to
twenty-two nearly i that is, for one ounce of gold
there are imported a little more than twenty-two
ounces of filver. The great quantity of filver
ient annually to the Eaft Indies, reduces, he fup-
pofes, the quantities of thofe metals which re-
main in Europe to the proportion of one to four-
teen or fifteen, the proportion of their values.
The proportion between their values, he feems
to think, mull neceflarily be the fame as that be-
tween their quantities, and would therefore be as
one to twenty-two, were it not for this greater
exportation of filver.

]^UT the ordinary proportion between the re^*-
fpeftive values pf two commodities is not qecef-
farily the fanme as that between the quantities of
them which are commonly in the market. The
price of an ox, reckoned at ten guineas, is about
threefcore times the price of a lamb, reckoned at
3 J. 6d. It would be abfurd, however, to infer
from thencey that there are commonly in the mar-
ket threefcore lambs for one ox : and it would be
juft as abfurd to infer, becaufe an ounce of gold
will commonly purchafe from fourteen to fifteen
ounces of filver, that there are commonly in the
market only fourteen or fifteen oiinces of filver
for one ounqe of gold.

The

332 THE NATURE AND CAUSES OF

1'he quantity of filvcr commonly in the mar-
ie^ it is probable, is much greater in propor-
tion to that of gold, than the value of a cer-
tain quantity of gold is to that of an eqi^al
quantity of filver. The whole quantity of a
cheap commodity brought to market, is com-
monly not only greater, but of greater value,
than the whole quantity of a dear ^ one. The
whole quantity of bread annually brought to
market, is not only greater, but of greater value
than the whole quantity of butcher's-meat ; the
whole quantity of butcher's-meat, than the whole
quantity of poultry ; and the whole quantity of
poultry, than the whole quantity of wild fowl.
There are fo many more purchafers jfor the cheap
than for the dear commodity, that, not only a
greater quantity of it, but a greater value, can
commonly be difpofed of The whole quantity,
therefore, of the cheap commodity muft com-
monly be greater in proportion to the whole
quantity of the dear one, than the value of a cer-
tain quantity of the dear one, is to the value of
an equal quantity of the cheap one. When we
compare the precious metals with one another,
filver is a cheap, and gold a dear Commodity.
We ought naturally to exped:, therefore, that
there fhould always be in the market, not only a
greater quantity, but a greater value of filver
than of gold. Let any man, who has a little of
both, compare his own filver with his gold plate>
and he will probably find, that, not only the
quantity, but the value of the former greatly ex-
ceeds that of the latter. Many people, befides,

Jiavc

XI.

THE WEALTH OF NATIONS. ^ 333

have a good deal of filver who have no gold chap,
plate, which, even widi thofe who have it, is ge-
nerally confined to watch-cafes, fnufF- boxes, and
fuch like trinkets, of which tjie whole amount is
feldom of great value. In the Britifh coin, in-
deed, the value of the gold preponderates great-
ly, but it is not fo in that of all countries. In
the coin of fome countries the value of the two
metals is nearly equal. In the Scotch coin, be-
fore "the union with England, the gold prepon-
derated very little, though it did fonaewhat *, as
it appears by the accounts of the mint. In the
coin of many countries the filver preponderates^
In France, the largeft fums are commonly paid
in that metal, and it is there difficult to get more
gold than what is neceffary to carry about in
your pocket. The fuperior value, however, of
the filver plate above that of the gold, which
takes place in all countries, will much more than
compenfate the preponderancy of the gold coin
above the filver, which takes place only in' fome
countries.

Though, in one fenTe of the word, filver al-
ways has been, and probably always will be,
much cheaper than gold ; yet in another fenfe,
gold may, perhaps, in the prefent ftate of the
Spanilh market, be faid to be fomewhat cheaper
than filver. A commodity may be faid to be
dear or cheap, not only according to the abfo-
kite greatnefs or fmallnefs of its ufual price, but

• See Ruddiman'a Preface to Anderfon's Piplomata, &c.
Scotiae,

accord in or

iU THE NATURE ANt) CAUSES OF

BOOK according as that price is more or left above thd
lowed for which it is poffible to bring it to mar-
ket for any confiderable time together. This
loweft price is that which barely replaceSj with a
moderate profit, the ftock which muft be em-
ployed in bringing the commodity thither. Ic
is the price which affords nothing to the land-
lord, of which rent makes not any component
part, but which relblvcs itfelf altogether into
wages and profit. But, in the ' prefent ftate of
the Spanifh market, gold is certainly fomewhat
nearer to this loweft price than filveri The tax
of the King of Spain upon gold is only one-
twentieth part of the ftandard metal, or five per
cent.; whereas his tax upon filver amounts to
one-tenth part of it> or to ten per cent. In
thefe taxes too, it has already been obferved,
confifts the whole rent of the greater part of the
gold and filver mines of Spanifli America; and
that upon gold is ftill worfe paid than that upon
filver* The profits of the undertakers of gold
mines too, as they more rarely make a for-
tune, muft, in general, be ftill more moderate
than thofe of the undertakers of lilver mines*
The price of Spanifh gold, therefore, as it af-
fords both kfs rent and lefs profit, muft, in the
Spanifli market, be fomewhat nearer to the
loweft price for which it is poffible to bring it
thither, than the price of Spanifh filver* When
all expences are computed, the whole quantity
of the one metal, it would feem, cannot, in the
Spanifh market, be difpofed of fo advantageoufly
as the whole quantity of the other. The tax,
7 indeed.

tHE WEALTH OF NATIONS. ^ 535

indeed, of the King of Portugal upon the gold chap*
of the Brazils, is the fame with the ancient tax ^'*
of the King of Spain upon the filver of Mexico
and Peru ; or one-fifth part of the ftandard me-
tal. It may, therefore, be Uncertain whether to
the general market of Europe the whole mafs of
American gold comes' at a price nearer to the
loweft for which it is pofTible to bring it thither,
than the whole mafs of American filver.

The price of diamonds and other precious
ftones may, perhaps, be ftill nearer to the loweft
price at which it is poflible to bring them to mar-
ket, than even the price of gold.

Though it is not very probable, that any part
ofa tax which is not only impofed ..upon one of
the moft proper fubjefts of taxation, a mere lux-
ury and fuperfluity, but which affords fo very
important a revenue, as the tax upon filver, will
eve^ be given up as long as it is poflible to pay
iti yet the fame impofllbility of paying it, which
in 1736 made it neceflfary to reduce it from one-
fifth to one-tenth, may in time make it necefl!ary
to reduce it ftill further ; in the fame manner as
it made it neceflary to reduce the tax upon gold
tt) one-twentieth. That the filver mines of Spa-
nifti America, like all other mines, become
gradually more expenfive in the working, on ac-
count of the greater depths at which it is neceflary
to carry on the works, and of the greater expence
of drawing out the water and of fupplying them with
frefti air at thofe depths, is acknowledged by every
body who has enquired into the ftate of thofe.
mines, -

These

336 THE NATURE AND CAUSES OP

BOOK. These caufes, which arc equivalent to a grow-
ing fcarcity of filver (for a commodity may be
faid to grow /career when it becomes more diffi-
cult ^nd expenfive to coUeft a certain quantity
of it), muft, in time, produce one or other of the
thr^e following events. The increafe of the ex^
pence muft cither, fir ft, be compenfated altoge-
ther by a proportionable increafe in the price of
the metal ; or, fecondly, it muft be compenfated
altogether by a proportionable diminution of the
tax upon filver; or, thirdly, it muft be com-
penfated partly by the one, and partly by the
other of thofe two expedients. This third event
is very poffible. As gold rofe in its price in
proportion to filver, notwithftanding a great di-
minution of the tax upon gold; fo' filver might
rife in its price in proportion to labour and coiti-
modities, notwithftanding. an equal diminution
of the tax upon filver.

Such fucceffive reduftions of the tax, how-
ever, though they may not prevent altogether,
muft certainly retard, more or lefs, the rife of the
value of filver in the European market. In con-
fequence of fuch. reduftions, many mines may be
wrought which could not be wrought before,^
becaufe they could not afford to pay the old tax ;
and the quantity of filver annually brought to
market muft always be fomewhat greater, and,
therefore, the value of -any given quantity fome-
what lefs, than it otherwife would have been.
In confequence of the reduftion in 1736, the
value of filver in the European market, though
it may not at this day be lower than before that

redudion.

tHE WEALTH OF NATIONS. 337

rcduftion, is, probably, at leaft ten per cent, chap*
lower than it would have been, had the Court of
Spain continued to exaft the old tax.

That, notwithftanding this reduftioA, the
' value of lilver has, during the courfe of the pre-
fent century, begun to rife fomewhat in the Eu^
ropean market, the fadts and arguments which
have been alleged above, difpofe me to believe,
or more properly to fufpeft and conjefture ; for
the beft opinion which I can form upon this fub-
je(5t fcarce, perhaps, deferves the name of belief*
The rife, indeed, fuppofing there has been any,
has hitherto been fo very fmall, that after all that
has been faid, it may, perhaps, appear to many
people uncertain, not only whether this event has
aftually taken place; but whether the contrary
may not have taken place, or whether the value
of filver may not ftill continue to fall in the Eu-
ropean market.

It muft be obferved, however, that whatever
may be the fuppofed annual importation of gold
and filver, there mull be a certain period, at
which the annual confumption of thofe metals
will be equal to that annual importation. Their
confumption muft increafe as their mafs in-
creafes, or rather in a much greater proportion.
As their mafs increafes, their value diminilhes.
They are more ufed, and lefs cared for, and
their confumption confequently increafes in a
greater proportion than their mafs. After a certain
period, therefore, the annual confumption of thofc-
metals muft, in this manner, become equal to their
annual importation, provided that importation
. Vol. I. Z is

338 THE NATtJRE AND CAUSES OP

B o o ic is not continually incrcafing ; which, in the pre-
^' fcnt times, is not fuppofed to be the cafe.

If, when the annual confumption has become
equal to the annual importation, the annual im-
portation Ihould gradually diminifh, the annual
confumption may> for fome time, exceed the
annual importation* The mals of thofe metals
may gradually and infenfibly diminifh> and
their value gradually and infenfibly rife, till the
annual importation becoming again ftationary,
the annual confumption will gradually and in-
fenfibly accommodate itfelf to what that annual
importation can maintain.

Grounds of the Sufpicion that the Value of Silvef

Jiill continues to decreafe.

np H E increafe of the wealth of Europe, and
^ the popular notion that, as the quantity of
the precious metals naturally increafes with the
increafe of wealth, fo their value diminilhes a^
their quantity increafes, may, perhaps, difpofe
many people to believe that their value ftill con-
tinues to fall in the European market ^ and the
ftill gradually increafing price of many parts of
the rude produce of land may confirm them ftill
further in this opinion.

That that increafe in the quantity of the pre-
cious metals, which arifes in any country from
the increafe of wealth, has no tendency to di-
minifh their value, I have endeavoured to fbo'wr
already. Gold and filver naturally reforj; to a

. rich

•THE WEALTH OP NATIONS. 339

Vich country, for the feme reafon that all forts of c hap.
luxuries and curiofities refbrt to it; not becaufe
they are cheaper there than, in poorer countries j
but becaufe they are dearer, or becaufe a better
price is given for them. It is the fuperiority of
price which attrafts them, ' and as foon as that
fuperiority ceafesy they neceflarily ccafe to go
thkher.

If you except corn and fiich other vegetables
as are raifed altogether by human induftry, that
all other forts of rude produce, cattle, poultry,
game of all kinds^ the -ufeful foffils and minerals
of the earth, &c. naturally grow dearer as the
fociety advances in wealth and improvement, I
have endeavoured to lliow already. Though fuch
commodities, therefore, come to exchange for
a greater quantity of filver than before, it will
not from theiice follow that filver has become
really cheaper, of will purchafe Icfs labour than
before, but that fuch commodities have become
really dearer, or will purchafe more labour tha-n
before. It is not their nominal price only, but
their real price which rifes in the progrefs of
improvement* The rife of their nominal price
is the efFedt, not of any degradation of the value
of filver, but of the rife in their real price?

Different Effects of the Progrefs of Improvement
lip on three different Sorts of rude Produce*

nPHESE different forts of rude produce may

■* be divided into three clafles. The firft

compreheads thofe which it is fcarce in the

Z 2 power

340 TMK NATURE AND CAUSES OF

BOOK power of human induftry to multiply at all. The
fecond, thofe which it can multiply in propor-
tion to the demand. The third, thofe in which
the efficacy of induftry is either limited or un-
certain. In the progrefs of wealth and improve-
ment, the real price of the firft may rife to any
degree of extravagance, and feems not to be li-
mited by any certain boundary. That of the
fecond, though, it may rife greatly, has, how-
ever, a certain boundary beyond which it cannot
well pals for any confidefablc time together.
That of the third, though its natural tendency is
to rife in the progrels of improvement, yet in
the fame degree of improvement it may fome-
times happen even to fall, fometimes to continue
the fame, and fometimes to rife more' or lefs, ac-
cording as different accidents render the effi>rts of
human induftry, in multiplying this fort of rude
produce, more or lels fuccefsful.

Firji Sort.

The firft fort of rude produce of which die
price rifes in the progrefs of improvement, is
that which it is fcarce in the power of human in-
duftry to multiply at all. It confifts in thofe
things which nature produces only in certain
quantities, and which being of a very perifliable
nature, it is impoffible to accumulate together
the produce of many different feafons. Such are
the greater part of rare and fmgular birds and
fifhes, many different Ibrts of game, almoft all
wild- fowl, all birds of palTage in particular, as
well as many other things. When wealth and

the

THE .WEALTH OP NATIONS. 341

the luxury which accompanies it increale, the ^ ^a p.
demand for thefe is likely to increafe with them,
and no eflfort of human induftry may be able to
increafe the fupply much beyond what it was
before this increafe of the demand. The quan-
tity of fuch commodities, therefore, remaining
the fame, or nearly the fame, while the competi-
tion to purchale them is continually increafing,
their price may rife to any degree of extrava-
gance, and feems not to be limited by any cer-
tain boundary. If woodcocks fliould become fo
fafliionable as to fell for twenty guineas a-piece,
no effort of human induftry could increafe the
number of thofe brought to market, much be-
yond what it is at prefent. The high price paid
by the Romans, in the time of their greatqft
grandeur, for rare birds and fifties, may in this
manner eafily be accounted for. Thefe prices
were not the effeds of the low value of filver in
thofe times, but of the high value of fuch rarities
and curiofities as human induftry could not mul-
tiply at pleafure. The real value of filver was
higher at Rome, for fome time before and after
the fall of the republic, than it is through the
greater part of Europe at prefent. Three fefter-
tii, equal to about fixpence fterling, was the
price which the republic paid for the modius
or peck of the tithe wheat of Sicily. This price,
however, was probably below the average market
price, the obligation to deliver their wheat at
this rate being confidered as a tax upon the Si-
cilian farmers. When the Romans, therefore,
had occasion to order more corn than the tithe of

Z.3 wheat

34* THE NATURE AND CAUSES OF

BOOK wheat amounted to, they were bound by capi-
^* tulation to pay for the furplus at the rate of four
feftertii, or eight-pence fterling, the peck; and
this had probably been reckoned the moderate
and reafonable, that is, the ordinary or average
contrad price of thofe times ; it is equal to about
one-and- twenty (hillings the quarter. Eight-
and*twenty ftiillings the quarter was, before the
late years of fcarctty, the ordinary contraft price
of Englifh wheat, which in quality is inferior to
the Sicilian, and generally fells for a lower price
in the European market. The value of filver,
therefore, in thofe ancient times, muft have been
to its value in the prefent, as three to four m-
verfely ; that is, three ounces of filver would
then have purchafed the fame quantity of labour
and commodities which four ounces will do at
prefent. When we read in Pliny, therefore, that
Seius * bought a white nightingale, as a prefent
for the emprefs Agrippina, at the price of fix
thoufand feftertii, equal to about fifty pounds
of our prefent money ; and that Afinius Celer f
purchafed a furmullet at the price of eight thou-
fand feftertii, equal to about fixty-fix pounds
thirteen (hillings and four-pence of our prc(ent
rponey; the extravagance of thofe prices, how
rnuch foever it may furprife us, is apt, not-
withftanding, to appear to us about one-third
lefs than it really was. Their real price, the
quantity of labour and fubfiftence which was
given awky for them, was about one-third more
than their nominal price is apt to exprefs to us

* Lib. X. c, 29. f Lib. ix. e, 17.

THE WEALTH OF NATIONS. 343

in the prefent times, Seius gave for the nightin- c h a ?•
gale the command of a quantity of labour and
fubfiftence equal to what 661. 13J. 4^/, would
purchafe in the prefent times ; and Afinius Celer
gave for the furmuUet the command of a quantity
equal to what 88/. lyj. 9</.4, would purchafe.
What occafioned the extravagance of thofe high
prices was, not fo much the abundance of filver,
as the abundance of labour and fubfiftence, of
which thofe Romans had the difpofal, beyond
what was neceffary for their own ufe. The quan-
tity of filver, of which they had the difpofal,
was a good deal lefs than what the command
of the fame quantity of labour and fubfiftence
would have procured to them in the prefent times.

Second Sort.

The fccond fort of rude produce of which
the price rifes in the progrefs of improvement,
is that which human induftry can multiply in
proportion to the demand. It confifts in thofe
uieful plants and animals, which, m unculti-
vated countries, nature produces with fuch pro-
fiife abundance, that they are of little or no
value, and which, as cultivation advances, are
therefore forced to give place to feme more pro-
fitable produce. During a long period in the
progrefs of improvenient, the quantity of thefe
is continually diminifhing, while at the fame
time the demand for them is continually in-
creafing. Their real value, therefore, the real
quantity of labour which they will purchafe or
^ cojjunand, gradually rifes, till at laft it gets fo

Z 4 high

344 THE NATURE AND CAUSES OP

E o o K f^jgh as to render them as profitable a produce
as any thing elfe which human indulby can raife
upon the moft fertile and beft cultivated land.
When it has got fb high it cannot well go
higher. If it did, more land and more indufby
would fbon be emjHoyed to increafe their quantity.

When the price of cattle, for example, rifcs
fo high that it is as profitable to cultivate land
in order to raife food for them, as in order to
raife food for man, it cannot well go higher.
If it did, more corn land would foon be turned
into pafture. The extenfion of tillage, by dimi-
nifhing the quantity of wild pafture, diminifhes
the quantity of butchcr's-meat which the country
naturally produces without labour or cultiva-
tion, and by increafing the number of thofe
who have either corn, or, what comes to the
fame thing, the price of corn, to give in ex-
change for it, increafes the demand. The price
of butcher's- meat, therefore, and confequently
of cattle, muft gradually rife till it gets fo high,
that it becomes as profitable to employ the moft
fertile and beft cultivated lands in raifing food
for them as in raifing corn. But it muft always
be late in the progrefs of improvement before
tillage can be fo far extended as to raife the
price of cattle to this height ; and till it has got
to this height, if the country is advancing at all,
their price muft be continually rifing. There
are, perhaps, feme parts of Europe in which
the price of cattle has not yet got to this height.
It had not got to this height in any part of Scot-
land before the union. Had the Scotch oatdc

THE WEALTH OF NATIONS. 345

been always confined to the market of Scotland, chap.
in a country in which the quantity of land, which
can be applied to no other purpofe but the
feeding of cattle, is fo great in proportion to
what can be applied to other purpofes, it js
fcarce poflible, perl^aps, that their price could
ever have rifen fo high as to render it profitable
to cultivate land for the fake of feeding them.
In England, the price of cattle, it has already
been obferved, feems, in the neighbourhood of
London, to have got to this height about the
beginning of the laft century; but it was much
later probably before it got to it through the
greater part of the remoter counties ; in fome of
which, perhaps, it may fcarce yet have got to it.
Of all the different fubftances, however, which
compofe this fecond fort of rude produce, cattle is,
perhaps, that of which the price, in the progreii
of improvement, firft rifes to this height.

Till the price of cattle, indeed, has got
to this height, it feems fcarce poflible that the
greater part, even of thofe lands which are ca-
pable of the highefl cultivation, can be com-
pletely cultivated. In all farms too diftant from
any town to carry manure from it, that is, in
the far greater part of thofe of every extenfivc
country, the quantity of well- cultivated land
mull be in proportion to the quantity of manure
which the farm itfelf jft-oduces; and this agaia
muft be in proportion to the ftock of cattle
which are maintained upon it. The land is
manured either by pafturing the cattle upon it,
Qr by feeding them in the ftable, and from

thence

346 THE NATURE AND CAUSES OP

BOOK thence carrying out their dung to it. But unleia
the price of the cattle be fufficient to pay both
the rent and profit of cultivated land, the farmer
cannot afford to pafture them upon itj and he
can ftill lefs afford to feed them in the flable.
It is with the produce of improved and culti-
vated land only, that cattle can be fed in the
ftable ; becaufe to coUeft the fcanty and fcattered
produce of wafte and unimproved lands would
require too much labour and be too cxpcnfive.
If the price of the cattle, therefore, is not fufB-
cient to pay for the produce of improved and
cultivated land, when they are allowed to paflure
it, that price will be ftill kfs fufiicient to pay
for that produce when it muft be coUefted with
a good deal of additional labour, and brought
into the ftable to them. In thefe circumftanccs,
therefore, no more cattle can, with profit, be
fed in the ftable than what arc necefTary for til-
lage. But thefe can never afford manure enough
for keeping conftandy in good condition, all the
lands which they are capable of cultivating.
What they afford being infufficient for the wholo
farm, wiU naturally be referved for the lands to
which it can be moft advantageoufly or conve-
niently applied ; the moft fertile, or thofc, perhaps,
in the neighbourhood of the farm-yard, Thefe,
therefore, will be kept conftandy in good con-
dition and fit for tillage. The reft will, the
greater part of them, be allowed to lie waAe,
producing fcarce any thing but Ibme miferabJe
pafture, juft fufficient to keep alive a few ftrag-
gling, half-ftarved cattle; the &rm> though

^ much

THE WEALTH OF NATIONS. 34^

much underftocked in proportion to what would 0 h a p.
be neceflary for its complete cultivation, being ^'
very frequently overftocked in proportion to its
aftual produce, A portion of this wafte land,
however, after having been paftured in- thi^
wrt^ched manner for fix or feven years together,
may be ploughed up, when it will yield, perhaps,
a poor crop or two of bad oats, or of fomc
other coarfe grain, and then, being entirely ex-
haufted, it muft be retted and paftured again
as before, and another portion ploughed up to
be in the fame manner exhaufted and rcfted
again in its turn. Such accordingly was the
general fyftem of management all over^the low
country of Scotland before the union. The
lands which were kept conftantly well manured
and in good condition, feldom exceeded a third
or a fourth part of the whole farm, and fome-
times did not amount to a fifth or afixth part of it.
The reft were never manured, but a certain por-
tion of them was in its turn, notwithftanding,
regularly cultivated and exhaufted. Under this
fyftem of management, it is evident, even that
part of the lands of Scotland which is capable of
good cultivation, could produce but little in
comparifon of what it may be capable of pro-
ducing. But how difadvantageous foever this
fyftem may appear, yet before the union the low
price of cattle feems to have rendered it almoft
unavoidable. If, notwithftanding a great rife in
their price, it ftiU continues to prevail through a
confiderable part of the country, it is owing, in
many places, no doubt, to ignorance and attach-
ment

348 THE NATURE AND CAUSES OF

o o K ment to old cuftoms^ but in moft places to the
unavoidable obftructions which the natural courfe
of things oppofes to the immediate or fpeedy
eilabliihment of a better fyftem : firft, to the po-
verty of the tenants, to their not having yet had
time to acquire a flock of catde fufficient to cul-
tivate their lands more completely, the fame rife
of price which would render it advantageous for
them to maintain a greater ftock, rendering it
more difficult for them to acquire it; and, fe-
condly, to their not having yet had time to put
their lands in condition to mdntain this greater
ftock properly, fuppofing they were capable c^
acquiring it. The increafe of ftock and the im-
provement of land are two events which muft go
hand in hand, and of which the one can no- where
much out-run the other* Without fome increafe
of ftock, there can be fcarce any improvement of
land, but there can be no confiderable increafe
of ftock but in confequence of a confiderable
improvement of land; becaufe otherwife the
land could not maintain it. Thefe natural ob-
ftruftions to the eftablifhment of a better fyftem,
cannot be removed but by a long courfe o( fru-
gality and induftry ; and half a century or a cen-
tury more, perhaps, muft pafs away before the
old fyftem, which is wearing out gradually, can
be completely abolifhed through all the different
parts of the country. Of all the commercial
advantages, however, which Scotland has de-
rived from the union with England, this rife in
the price of catde is, perhaps, the greateft. It has
not only raifed the v^lue of all highland eftates^

but

THE WEALTH OF NATIONS. 349.

but it has, perhaps, been the principal caufe of c hap.
thie improvement of the low country.

In all new colonies the great quantity of waftc
land, which can for many years be applied to no
other purpofe but the feeding of cattle, foon
renders them extremely abundant, and in every
thing great cheapnefs is the neceflary confe-
quence of great abundance. Though all the
cattle of the European colonies in America were
originally carried from Europe, they foon multi-
plied fo much there, and became of fo little
value, that even horfes were allowed to run wild,
in the woods without any owner thinking it worth
while to claim them. It muft be a long time
after the firft eftabliftiment of fuch colonies, be-
fore it can become profitable to feed cattle upon
the produce of cultivated land.^' The fame
caufes, therefore, the want of manure, and the
difproportion between the (lock employed in cul-
tivation, and the land which it is deftined to
cultivate, are likely to introduce there a fyftem
of hufbandry not unlike that which frill continues
to take place in fo many parts of Scotland. Mr.
Kalm, the Swedilh traveller, when he gives an
account of the hufbandry of fome of the Englifh
colonies in North America, as he found it in
^749, obferves, accordingly, that he can with
difficulty difcover there the charafter of the
Englifli nation, fo well fkilled in all the different
branches of agriculture. They make fcarce any
manure for their corn fields, he fays; but when
one piece of ground has been exhaufled by con-
tinual cropping, they clear and cultivate another

piece

S50 THft NATtJRE AMD CAtJSfiS 0»

BOOK piece of frefh land; and when that is exhauftecj,
proceed to a third. Their cattle are allowed«to
wander through the woods and other unculti-
vated grounds, where they are half-ftarved ;
having long ago extirpated almoft all the an-
nual grafles by cropping them too early in the
fpring, before they had time to form their
flowers, or to flied their feeds *• The annual
grafles were, it feems, the bell natural grafles in
that part of North America j and when the Eu-
ropeans firfl: fettled there, they uled to grow very
thick, and to rife three or four feet high. A
piece of ground which, when he wrote, could
not maintain one cow, would in former times,
he was aflured, have maintained four, each of
which would have given four times the quantity
of milk whicfF that one was capable of giving.
The poornefs of the paflure had, in his opinion,
occafioned the degradation of their cattle, which
degenerated fenfibly from one generation to an^
other. They were probably not unlike that
Hunted breed which was common all over Scot-
land thirty or forty years ago, and which is now
fo much mended through the greater part of the
low country, not fo much by a change of the
breed, < though that expedient has bec'n employed
in fome places, as by a more plentiful method of
feeding them.

Though it is late, therefore, in the progrefs of
improvement before cattle can bring fuch a price
as to render it profitable to cultivate land for the

♦ Kaim's Travels, voL i. p. 313* 344.

fake

THE WEALTH CP NATIONS. , 55!

fake of feeding them ; yet of all the different parts chap.
which Gompofe this fecond fort of rude produce, ^''
they are perhaps the firfl: which bring this price ;
becaufe till they bring it, it feems impoQible that
improvenment can be brought near even to that'
degree of perfection to which it has arrived ia
many parts of Europe.

As cattle are among the firft, fo perhaps yeni-
fon is among the laft parts of this fort of rude
produce which bring this price. The price of
venifon in Great Britain, how extravagant foever
it may appear, is not near fufficient to compen-
fate the expence of a deer park, as is well known
to all thofe who have had any experience in the
feeding of deer. If it was otherwife, the feed-
ing of deer would foon become an article of
common farming; in the fame manner as the
feeding of thofe fmall birds called Turdi was
among the ancient Romans. Varro and Colu-
mella afTure us that it was a moft profitable ar-
ticle. The fattening of ortolans, birds of paf-
fage which arrive lean in the country, is faid to
be fo in fome parts of France. If venifon con-
tinues in falhion, and the wealth and luxury of
Great Britain increafe as they have done for fome
time paft, its price may very probably rife ftili
higher dian it is at prefent.

Between that period in the progrefs of im-
provement which brings to its height the price
of fo^ neceffary an article as cattle, and that,
which brings to it the price of fuch a fuperfluity
as venifon, there is a very long interval, in the
courfe of which many other forts of rude produce

gradually

35* THE NATURE AND CAUS£S OP

BOOK gradually arrive at their higheft price^ fome fooner
and fome later, according to different circum-
dances.

Thus in every farm the offals of the barn and
{tables will maintain a certain number of poul-
try. Thefe, as they are fed with what would
otherwife be loft, are a mere fave-all; and as
they coft the farmer fcarce any thing, ib he can
afford to fell them for very litde. Almoft all
that he gets is pure gain, and their price can
fcarce be fo low as to difcourage him from feed-
ing this number. But in countries ill culti-
vated, and^ therefore, but thinly inhabited, the
poultry, which are thus raifed without expence,
are often fully fufficient to fupply the whole de-
mand. In this ftate of things, therefore, they
are often as cheap as butcher's-meat, or any
other fort of animal food. But the whole quan-
tity of poultry, which the farm in this manner
produces without expence, muft always be much
fmaller than the whole quantity of butcher's-
meat which is reared upon it ; and in times of
wealth and luxury what is rare, wirfi only nearly
equal merit, is always preferred to what is com-
rnon. As wealth and luxury increafe, therefore,
in confequence of improvement and cultivation,
the price of poultry gradually rifes above that of
butcher's-meat, till at laft it gets fo high that it
becomes profitable to cultivate land for the fake
of feeding them. When it has got to this height,
it cannot well go higher. If it did, more land
would foon be turned to this purpofe. In feve-
ral provinces of France, the feeding of poultry is

confidered

•tHE WEALTH OP NATIONS. 353

Confidered as a very important article in rural C « a p.
ceconomy, and fufficiently profitable to encou-
rage the farmer to raife a confiderable quantity of
Indian corn and buck- wheat for this purpofe.
A middling farmer will there fometimes have
four hundred fowls in his yard. The feeding of
poultry feems fcarce yet to be generally con-
fidered as a matter of fo much importance in
England. They are certainly, however, dearer
in England than in France, as England receives
confiderable fupplies from France. In the pro-,
grefs of improvement, the period at which every
particular fort of animal food is deareft, muft
naturally be that which immediately precedes the
general pradice of cultivating land for the
fake of raifing it. For fpme time before this
pra6tice becomes general, the fcarcity muft ne-
ceflarily raife the price. After it has become
general, new methods of feeding are commonly
fallen upon, which enable the farmer to raife
upon the fame quantity of ground a much
greater quantity of that particular fort of animal
food. The plenty not only obliges him to fell
cheaper, but in confequence of thefe improve-
ments he can afford to fell cheaper; for if he
could not afford it, the' plenty would not be of
long continuance. It has been probably in this
manner that the introduftion of clover, turnips,
carrots, cabbages, &c. has contributed to fink
the common price of butcher's- meat in the Lon-
don market fomewhat below what it was about
the beginning of the laft century.

Vol. I. A a The

S$4 THE NATtJitE AND CAUSES ti^

The hog, that finds his (bod among ordurt'>
and greedily devours many things rcjcfted by every
other ufeful animal, is> like poultry, ori^nally
kept as a fave-all. As long as the number of
fuch animals, which can thus be reared at little
or no expence, is fully fufficient to lupply the
demand, this fort of butcher*s-meat comes to
market at a much lower price than any other.
But when the demand rifes beyond what this
quantity can fupply, when it becomes neceflary
to raife food on purpofe for feeding and fatten^
ing hogs, in the fame manner as for feeding and
fattening other cattle, the price neceflarily riics,
and becomes proportionably either higher or
lower than that of other butcher *s-meat, accord-
ing as the nature of the country, and the flatc of
its agriculture, happen to render the feeding of
hogs more or lefs expenfive than that of other
^.--ycattle. In France, according to Mr. BufFon, the
>• ^ Jpri^^ ^f P^'"^ is nearly equal to that of beef. I,n

^ v'^moft parts of Great Britain it is at prefent fome-

^. What higher.

The great rife in the price both of hogs and
poultry has in Great Britain been frequently im-

' ^. ^ ^ puted to the diminution of the number of cot-

tagers and other fmall occupiers of land; an
event which has in every part of Europe been the
immediate forerunner of improvement and bet-
ter cultivation, but which at the fame time may
have contributed to^ raife the price of thofe arti-
cles, both fomewhat fooner and fomewhat fafler
than it would otherwife have rifen. As the

pooreft

THE WEALTH OF NATION*. 3SJ

pooreft family can often maintain a cat or a dog, chap.
without any expence, fo the pooreft occupiers of
land can commonly maintain a few poultry, or i
fow and a few pigs, at very little. The little
offals of their own table, their whey, fkimmed
milk and butter-milk, fupply thofe animals with
^ part of their food, and they find the reft in the
neighbouring fields without doing any fcnfible
damage to any body. By diminiftiing thenum-
ber of thofe fnlall occupiers, therefore, the quan-
tity of this fort of provifions which is thus pro-
duced at little or no expence, muft certainly have
been a good deal diminifhed, and their price muft
confequently have been raifed both fooner and
fafter than it would otherwife have rifen. Sooner
or later, however, in the progrefs of improve-
ment, it muft at any rate have rifen to the utmoft
height to which it is capable of rifingj or to
the price which pays the labour and expence
of cultivating the land which furnifhes them wi^h
food as well as thefe are paid upon the greater
part of other cultivated land.

The bufinefs of the dairy, like the feeding of
hogs and poultry, is originally carried on as a
fave-all. The cattle necefTarily kept upon the
farm, produce more milk than either the rearing '
of their own young> or the confumption of the
farmer's family requires 5 and they produce moft
at one particular feafon. But of all the produc-
tions of land, milk is perhaps the moft pefifli-
able. In the warm feafon, when it is moft
abundant, it will fcarce keep fbur-and-twenty
hours. The farmer, by making it into frefh

A a 2- butter.

is6 THE NATURE AND CAUSES OF

BOOK butter, ftores a fmall part of it for a week : by
making it into fait butter, for a year: and by
making it into cheefe, he ftores a much greater
part of it for fe veral years. Part^ of all thefe- is
referved for the ufe of his own family. The reft
goes to market, in order to find the beft price
which is to be had, and which can fcarce be fo
low as to difcourage him from fending thither
whatever is over and above the ufe of his own
family. If it is very low, indeed, he will be
likely to manage his dairy in a very flovenly and
dirty manner, and will fcarce perhaps think it
worth while to have a particular room or build-
ing on purpofe for it, but will fufFer the bufinefs
to be carried on amidft the fmoke, filth, and
naftinefs of his Own kitchen ; as was the cafe of
almoft all the farmers dairies in Scotland thirty
or forty years ago, and as is the cafe of many of
them ftiU. The fame caufcs which gradually
raife the price of butcher's-meat, the increafe of
the demand, and, in confequencc of the im-
provement of the country, the diminution of the
quantity which can be fed at little or no expence,
raife, in the fame manner, that of the produce
of the dairy, of which the pricire naturally con-
ncfts with that of butcher's meat, or with the
expence of feeding cattle. The increafe of
price pays for more labour, care, and cleanli-
nefs. The dairy becomes more worthy of the
farmer's attention, and the quality of its pro-
duce gradually improves. The, price at laft gets
fo kigh that it becomes worth while to employ
fome*^of the moft fertile and beft cultivated

lands

THE WEALTH OF NATIONS. 357

lands in feeding cattle merely for the purpofe of c h a p*
the dairy j and when it has got to this height, it
cannot v/ell go higher. If it did, more land
would foon be turned to this purpofe. It feems
to have got to this height through the greater
part of England, where much good land i^ com-
monly employed in this manner. If you except
the neighbourhood of a few confiderable towns,
it feems not yet to have got to this height any-
where in Scotland, where common farmers fel-
dom employ much good land in raifing food for
cattle merely for the purpofe of the dairy. The
pri^e of the produce, though it has rifen vtry
corifiderably within theft few years, is probably
ftill too low to admit of it. The inferiority of
the quality, indeed, compared with th^t of the
produce of Englifh dairies, is fully equal to that
of the price. But this inferiority of quality is,
perhaps, rather the efFeft of this lownefs of price
than the caufe of it. Though the quality was
much better, the greater part of what is brought
to raiarket could not, I apprehend, in the prefent
circumftances of the country, be difpofed of at a
much better price ; and the prefent price, it is
probable, would not pay the expence of the land
and labour neceflary for producing a much bet-
ter quality. Through the greater part of Eng-
land, notwithftanding the fuperiority of price,
the dairy is not reckoned a more profitable em-
ployment of land than the raifing of corn, or the
fattening of cattle, the two great objefts of agri-
culture. Through the greater part of Scotland,
therefore, it cannot yet be eyen fo profitable.

A a 3 The

35« THE NATURE AND CAUSES OF

The lands of no country, it is evident, can
ever be completely cultivated and improved, till
once the price, of every produce, which human
induftry is obliged to raife upon them, has got
fo high . as to pay for the experice of complete
improvement and cultivation. In order to do
this, the price of each particular produce muft
be fufBcient, firft, to pay the r€nt of good corn
land, as it is that which regulates the rent of the
greater part of other cultivated land; and fe-
condly, to pay the labour and expence of the
farmer as well as they are commonly paid upon
good corn- land; or, in other words, to replace
with the ordinary profits the (lock which he em-
ploys about it, This rife in the price of each
particular produce, muft evidently be previous
to the improvement and cultivation of the lan4
which is deftined for raifing it. Gain is the end
of all improvement, and nothing could deferve
that name of which lofs was to be the neceflary
confequence. But lofs muft be the neceflary
confequence of improving land for the fake of a
produce of which the price could never bring
back the expence. If the complete improve-
ment and cultivation of the country be, as it
moft certainly is, the greateft of all public ad-
vantages, this rife in the price of all thofe differ-
ent forts of rude, produce, inftead of being con-
fidered as a public calamity, ought to be rcr
garded as the neceflary forerunner and attend*
ant of the greateft of all public advantages.

This rife too in the nominal or money-price
of all thofe different forts of rude produce has

"^ been

THE WEALTH OF NATIONS. 359

been the effect, not of any degradation in the c h a p.
value of filver, but of a rife in their real price.
They have become worth, not only a greater
quantity of filver, but a greater quantity of la-
bour and fubliftence than before. As it cofts a
greater quantity of labour and fubfiftence to
bring them to market, fo when they are brought
thither, they reprefent or are equivalent to a
greater quantity. <

Third Sort.

Th^ third and laft fort of rude produce, of
which the price naturally rifes in the progrefs of
improvement, is that in which the efficacy of
human induftry, in augmenting the quantity, is
cither limited or uncertain. Though the real
price of this fort of rude produce, therefore, na-
turally tends tp rife in the progrefs of improve-
ment, yet, according as different accidents hap-
pen to render the efforts of human induftry more
or lefs fuccefsful in augmenting the quantity, it
inay happen Ibmetimes even to fall, fometime^
to continue the fame in very different periods of
improvement, and fometimes to rife more or lei^
in the fame period. ^

There ^e forpc forts of rude produce which
fiature has rendered a kind of appendages to
other forts ; fo that the quantity of the one
which any coyntry can ajFord, is neceffarily li-
mited by that of the other. The quantity of
vool or Qf raw hides, for example^ >yhich any

A a 4 country

36o THE NATURE AND CAUSES OF

BOOK country can afford, is neceffarily limited by the
'_ , number of grekt and fmall cattle that are kept
in it. The ftate of its improvement, and the
nature of its -agriculture, again neceffarily deter-
mine this number.

The fame caufes, which, in the progrefs of
improvement, gradually raife the price of but-
cher's-meat, ftiould have the fame effeft, it may be
thought, upon the prices of wool and raw hides,
and raife them too nearly in the fame proportion.
It probably would be fo, if in the rude begin-
. nings of improvement the market for the latter
commodities was confined within as narrow bounds
as that for the former. But the extent of their
refpedive markets is commonly extremely dif-
ferent.

The market for butcher's- meat is almoft
cvery-where confined to the country which pro-
duces it. Ireland, and fome part of Britilh
America indeed, carry on a confiderable trade in
fait provifions ; but they are, I believe, the only
'countries in the commercial world which do fo,
or which export to other countries any confider-
able part of their butcher's- meat.

The market for wool and raw hides, on the
contrary, is in the rude beginnings of improve-
ment very feldom confined to the country which
produces them. They pan eafily be tranlported
to diftant countries, wool without any prepara-
tion, and raw hides with very little : and as they
, are the materials of many manufaftures, the in-
^uftry of other countries may occafion a demand

for

XI,

THE WEALTH OF NATIONS. 361

for them, though that of the country which pro- c h a p.
duces them might not occafion any.

In countries ill cultivated, and therefore but
thinly inhabited, the price of the wool and the
hide bears always a much greater proportion to
that of the whole bead, than in countries v/here,
improvement and population being further ad-
vanced, there is more demand for butcher's i
meat, Mr. Hume obferves, that in the Saxori
times, the fleece was eftimated at two-fifths of
the value of the whole Iheep, and that this was
much above the proportion of its prefent cflima-
tion. In fome provinces of Spain, I have been
afllircd, the ftieep is frequently killed merely for
the fake of the fleece and the tallow. The car-
cafe is often left to rot upon the ground, or to
be devoured by beafl:s and birds of prey. If this
fometimes happens even in Spain, it happens al-
mofl: conftantly in Chili, at Buenos Ayres, and
iji many other parts of Spanifti , America, where
the horned cattle are almofl: confl:antly killed
merely for the fake of the hide and the tallow.
This too ufed to happen almofl: confl:antly in
Hifpaniola, whije it was infefl:cd by the Buc^
dancers, and before the fettlement, improvement,
and populoufnefs of the French plantations (which
now extend round the coafl: of almofl: the whole
weftern half of the ifland) had given fome value
to the cattle of the Spaniards, who fl:ill continue
to poflfefs, not only the eafl:ern part of the coafl:,
but the whole inland and mountainous part of the

C9untry.

Though

$6$

THE NATURE AND CAUSES OF

Though in the progrefs of irriprovement and
population, the price of the whole beaft necefla-
rily rifes, yet the price of the carcafe is likely to
be much more affefted by this .rife than that of
the wool and the hide. The market for the car-
cafe, being in the rude ftate of fociety confined
always to the country which produces it, muft
neceflarily be extended in proportion to the im-
provement and population of that country. But
the market for the wool and the hides even of a
^a^rbarous country often extending to the whole
commercial world, it can very feldom be en-
larged in the fame proportion. The ftate of the
whole commercial world can feldom be much
.affefted by the improvement of any particular
^country; and the market for fuch commodities
^Tiay remain the fame, or very nearly the fame,
after fuch improvements, as before. It fhould,
liowever, in the natural courfe of things rather
iipon the whole be fomewhat extended in confe-
quence of them. If the manufadtures, efpe-
cially, of which thofe commodities are the matc-
jrials, fliould ever come to flourifh in the coun-
try, the market, though it might not be much
enlarged, would at leaft be brought much nearcF
to the place of growth than befoi*e ; and the pricp
of thofe materials might at leaft be increafed by
wh^t had ufually been the expencc of tranfporting
them to diftant countries. Though it might not
rife therefore in the fame proportion as that of
butcher's -meat, it ought naturally to rife fome-
.what, and it ought certainly not to fall.

\
•

THE WEALTH OF NATIONS. 365

In England, however, notwithftanding the chap.
flourilhing ftate of its wpoUen manufafture, the
price of Englifh wool has fallen very confiderably
fmce the time of Edward III. There are many
authentic records which demonftrate that during
the reign of that prince (towards the nwddle of
the fourteenth century, or about 1339) what was
reckoned the moderate and rcafonable price of
the tod or twenty-eight pounds of Englifh wool
was not lefs than ten Ihillings of the money of
thofe times*, containing, at the rate of twenty-
pence the ounce, fix ounces of filver Tower-
weight, equal to ^bout thirty (hillings of our
prefent money. In the prefent times, one-andi-
twenty Ihillings the tod may be reckoned a good
price for very good Englilh wool. The money-
price of wool, therefore, in the time of Ed-
ward III, was to its money-price in the prefent
times as ten to feven. Tlie fuperiority of its
real price was ftill greater. At the rate of fijc
IhilUngs and eight-pence the quarter, ten ihil-
lings was in thofe ancient times the price of
twelve bufhels of wheat. At the rate of twenty-
eight (hillings the quarter, one - and - twenty
(hillings is in the prefent times the price of Ak
bufhels only. The proportion between the teal
prices of ancient and modern times, therefore,
is as twelve to fix, or a3 two to One. -In thofe
ancient times a tod of wool would have pur-
chafed twice the quantity of fubfiftence which it
will purchafe at prefcnt.j and confequently twice

* See Smith's Memoirs of Wool, vol. i. c. 5, 6, and 7 ;
alfo, vol. ii. c. 176.

9 the

3^4

THE NATURE AND CAUSES OF

B o o K the quantity of labour, if the real recompencc of
^' labour had been the fantie in both periods.

This degradation both in the real and nomi-
dyO'AA^ ' nal value of wool, could never have happened

^ in confequence of the natural courfe of things.

J t^

Jl '

It has accordingly been the efFeft of violence and
artifice: Firft, of the abfolute prohibition of
Exporting wool from England ; Secondly, of the
permiffion of importing it from Spain duty free ;
Thirdly, of the prohibition of exporting it from
Ireland to any other country but England. In
confequence of thefe regulations, the market for
Englifh wool, inftead of being fomewhat extend-
ed in confequence of the improvement of Eng-
land, has been confined to the home rharket,
where the wool of feveral other countries is al-
lowed to come, into competition with it, and
where that of Ireland is forced into competition
with it. As the woollen manufaftures too of
Ireland are fully as much difcouraged as is con-
fident with juftice and fair dealing, the Irifh can
work up but a fmall part of their own wool at
home, and are, therefore, obliged to fend a greater
proportion of it to Great Britain, die only market
they are allowed.

I Have not been able to find any fuch authentic
records concerning the pric^ of raw hides in an-
cient times. Wool was commonly paid as a
fubfidy to the king, and its valuation in that fub-
fidy afcertains, at leaft in fome degree, what was
its ordinary price. But this feems not to have
been the cafe with raw hides. Fleetwood, how-
ever, from an account in 1425, between the prior

5 of

THE WEALTH OF NATIOl^S. ^65

pf Burcefter Oxford and one of his canons, gives chap,
us their price, at leaft as it was ftated, upon
that particular occafion; viz. five ox hides at
twelve (hillings i five cow hides at feven Ihillings
and three pence; thirty- fix fteep fkins of two
years old at nine (hillings i fixteen calves fkins
at two Ihillings. In 1425, twelve (hillings cc^-
tained about the fanne quantity of filver as four-
and-twenty (hillings of our prefent money. An
ox hide, therefore, was in this account valued at
the fame quantity of filver as 4i. -Jths of our
prelent money. Its nominal price was a good
deal lower than at prefent. But at the. rate of
fix (hillings and eight- pence the quarter, twelve
(hillings would in thofe times have purchafed
fourteen bulhels and four-fifths of a bufhel of
wheat, which, at three and fix-pence the bufhel,
would in the prefent times coft 5ijr. ^d. An qx
hide, therefore, wpuld in thofe times have pur-
chafed as much corn as ten (hillings and three-
pence would purchafe at pre(ent. Its real value
was equal to ten (hillings and three-pence of our
prefent money. In thofe ancient times, when
the cattle were half ftarved during the greater
part of the winter, we cannot fuppofe that diey
were of a very large fize. An ox hide which
weighs four (lone of fixteen pounds averdupois,,
is not in the prefent times reckoned, a bad onci
and in thofe. ancient times would probably have
been reckorjed a very good one. But at half a
crown the (lone, which at this moment (Fe-
bruary 1773) I underdand to be the common
price, fuch a hide would at prefent coft gnly ten

(hillings.

^66 THE NATURE Al^ll> CAUSES dlP

BOOK Ihillings. Though its nominal price, therefore^
is higher in the prefent than it was in thofe ancient
times, its real price, the real quantity of fub-
fiftence which it will purchafe or command, is
/ather fomewhat lower. The price of cow hides,
as dated in the abdve account, is nearly in the
common proportion to that of ox hides. That of
fheep fkins is a good deal above it. They had
probably been fold with the wool. That of calves
Ikins, on the contrary, is greatly below it; In
countries where the price of cattle is very low, the
calves, which are not intended to be reared in
order to keep up the flock, are generally killed
very young; as was the cafe in Scotland twenty or
thirty years ago; It faves the milk, which their
price would not pay for. Their (kins, therefore,
are commonly good for Ktde.

The price of raw hides is a good deal lower
at prefent than it was a few yeafs ago; owing
probably to the taking off the duty upon feal
flcins, and to the allowing, for a limited time^
the importation of raw hides from Ireland and
from the plantations duty free, which was done
in 1769. Take the whole of the prefent cehtury
at an average, their real price has probably
been fomewhat higher than it was in thofe an-
cient times. The nature of the commodity
renders it not quite fo proper for being tranf-
ported to diftant markets as wocrf. It ftiflfers
more by keeping. A faked hide is reckoned
inferior to a frefh one, and fells for a lower price*
This circumftance muft neceflarily have fome
pendency to fink the price of raw hides produced

THE WEALTH OP NATIONS. 567

in a country which does not manufafture them, chap.
but is obliged to export them; and compara-
tively to raife that of thofe produced in a coun^
try which does manufafture them* It muft
have fome tendency to fink their price in a bar-
barous, and to raife it in an improved and manu-
fafturing country. It muft have had fome ten-
dency therefore to fink it in ancient, and to raife
it in modem times. Our tanners befides have
not been quite fo fuccelsful as our clothiers, in
convincing the wifdom of the nation, that the
fafety of the commonwealth depends upon the
prolperity of their particular manufafture. They
have accordingly been much lefs favoured. The
exportation of raw hides has, indeed, been pro-
hibited, and declared a nuifance: but their im-
portation from foreign countries has been fub-
jefted to a duty ; and though this duty has been
taken off from thofe of Ireland and the planta^
tions (for the limited time of five years only), yet
Ireland has not been confined to the market of
Great Britain for the fale of its furplus hides, or
of thofe which are not manufa(^ured at home.
The hides of common cattle have but within thefe
few years been put among the enumerated com-
modities which the plantations can fend no-where
but to the mother country j neither has the com-
merce of Ireland been in this cafe opprefled hi^
therto, in order to fupport the manufaftures of
Great Briton.

Whatever regulations tend to fink the price
either of wool or of raw hides below what it;
naturally would be, muft, in .an improved and

cultivated

3^8 THE NATURE AND CAUSES OF

BOOK cultivated country, have fbmc tendency to raife
the price of butcher *s-meat. The price both of
the great and fmall cattle, which are fed on im-
proved and cultivated land, mull be fufficient to
pay the rent which the landlord, and the profit
which the farmer has reafon to.expeft from im-
proved and cultivated land. If it is not, they
will foon ceafe to feed them. Whatever part of
this price, therefore, is not paid by the wool
and the hide, ntuft be paid by the carcafe. , The
lefs there is paid for the one, the more muft be
paid for the other. In what manner this price is
to be divided upon the different parts of the
beaft, is indifferent to the landlords and farmers,
provided it is all paid to them. In an improved
and cultivated country, therefore, their intereft
as landlords and farmers cannot be much affe^ed
by fuch regulations, though their intereft as
confumers may, by the rife in the price of pro-
vifions. It would be quite otherwife, however,
in an unimproved and uncultivated country,
where the greater part of the lands icould be
applied to no other purpofe but the feeding of
cattle, and where the wool and the hide msi^e
the principal part of the value of thofe cattle.
Their intereft as landlords and farmers would in
this cafe be very deeply affedled by fuch regula-
tions, and their intereft as confumers very little.
The fall in the price of the wool and the hide,
would not in this cafe raifc the price of the car-
cafe ; becaufe the greater part of the lands of the
country being applicable to no other purpofc
but the feeding of cattle, the fame number would

ftiU

THE WEALTH ^ OF NATIONS. 369

ftilt continue to be fed. The fame qxianticy of 0 h a p.
butcher's-meat would ftill conne to market. The ^''
demand for it would be no greater than before4
Its price, therefore, would be the fame as be-
fore. The whole price of cattle would fall, and
along with it both the rent and the profit of all
thofe lands of which cattle was the pri/icipal
produce, that is, of the greater part of the lands;
of the country. The perpetual prohibition of
the exportation of wool, which is commonly, but
very falfely, afcribcd to Edward III, would,
in the then circumftances of the country, have
been the mod deftruftive regulation which could
well have been thought of. It would not only
have reduced the aftual value of the greater part
of the lands of the kingdom, but by reducing the
price of the moll important Ipecies of fmall cattle,
it would have retarded very much its fubfequent
improvenient.

Thb wool of Scotland fell very confiderably
in its price in confequence of the union with
England, by which it was excluded from the
great market of Europe, and confined to the
narrow one of Great Britain. The value of the
greater part of the lands in the fouthern counties
of Scotland, which are chiefly a flieep country,
would have been very deeply affefted by this
event, had not the rife in the price of butcher's-
meat fully compenfated the fall in the price of
wool.

As the efficacy of human induftry, in in-
creafing the quantity either of wool or of raw
hides, is limited, fo far as it depends upon the

Vol. I. B b . produce

370 THB NATURE AND CAUSES OF

BOOK proiduce of Ac country where it is exerted ; fb k
is uncertain fo far as it depends upon the pro-
duce of other countries* It fo far depends, not
fo much upon the quantity which they produce,
as upon that which they do not manufacture ;
and upon the reftraints which they may or may
not think proper to impofe upon the exportation
of this fort of rude produce, Thefe circum^
fiances, as they are altogedier independent of
domeftic induftry, fo they nectflkrily render the
efficacy of its efforts more or lels unciertain. In
multiplying this fort of rude produce, therefore,
the efficacy of human induftry is not onty Umited^
but uncerfeun.

In multiplying anodieiwery important fort of

( U rude produce, the quantity of fifh that is broi^t

A/^ to market, it is likewife both limited and un-

Xa J certain. . It is limited by the local fituation of

^ f]f^ the country, by the proximity or diftaricc c£ its

j^U^ s different pi-ovinces from the fea, by the number

^ / of its lakes and rivers, and by what may be

L^;^^' ' called the fertility or barrennef^ of thofe feas,

-'^^ lakes and rivers, as to this fort of rude produce.

As population increafcs, as the annual produce
of the land and labour of the country grows
greater and greater, there come to be m<M-c
buyers of filh, and thofe buyers too have a
greater quantity and variety of other goods, or,
what is the fame thing, the price of a greater
quantity and variety of other goods, to buy with.
But it will generally be impoffible to fupply the
great and extended market without employing a
quantity of labour greater than in prc^ortion to

what

f^.

THi; WEAtttt OP NAtfONS; 5fl

virhat had been rtquifife for lupplying th^ AaffS^ ^ ^^ **
and confiAed 6he. A market i^^hidli, from ft- ''
quiring only one thoufand, ' comes to tequirfe
^nnuall^^ ten Aoiifand ibn of fifh^ can feldom be
fupplied withbui employing morfe' tIjaA teft times
the quahtity of feboCrr i^hich had before been
Yufficfeht to fupply it. Thfe fife mafl: gehetaB^
ht fought for at a' greater (Mfttfftce, larger veflefe
ifiiiffi be empldyed, and more exteriflve ma<:hi-
rifery of every kind ftiade ufe of. The rtal pricfe
df this <iot¥>modity, therefore/ ftatura% rifes'iii
the pfogreft 6f ifti|)foVfcnFifnt. It h'a^ accol-d-
iiigly d&n^ fo, I believe, more or lefs in eve^y
country.

Though the fuccefs of a particular day's fifh-
ing may be a Very uncertaih rrtatter, yet, thd
Jbtal fituation of th6 court try being fuppofed^
the general! eflicaey of ihddftry ih bringing i
Certain quantity of fift fb market, taking thi
courfe of a yfeai*, or 6f fevefal years together, it
rrifty ][)^h'aps be thought^ i^ certain eriough j and
ic,^ M- doubt> iS' fd. As it digpends riibfe, how'^
^Vef, upon th^ local fituation 6f thi country^
than upofi th^ flAte of ks weakh afnd indiiftry ;
^ tipori this a6c0tinf it itiiay ih diflfcrerlt countries!
he the fame in very different periods of infiptove-
merit, and very ^ifffereilt it\ thfe fame jperi6d j its
conncftiort with the &Att of ifilprerVeJrrient is im--
certain, and it h 6f thl& foff of ulfcert^lhfy that I '
am here fpeaking;*

In increafing thd quarititj^ of the dJitfer^rit ml-,
nefals ahd metals whith afe dt'sL^A front th*
bowels of the earth, th^t of the it{(^fQ pfeciou^"^

B b 2 ones

iji -THE NATURE AND CAUSES OF

BOOK ones particukrly, the efficacy of human incjuftry
feems not to be limicedj but to be altogether un-
certain.

The quantity of the precious metals which is
to be found in any country is not limited by any
thing in its local fituation, fuch as the fertUity
or barrennefs of its own mines. Thofe metals
frequently abound in countries which poflcfs no
mines. Their quantity in every particular coun-
try feems -to depend upon two different circum-
fiances ; firfl, upon its power of purchafing, upon
the ftate of its induflry, upon the annual produce
of its land and labour, in confequence of which
it can afFoi d to employ a greater or a fmdler quan-
tity of labour and fubfiflence in bringing or pur-
chafing fuch fuperfluities as gold and filver, cither
from its own mines or from thofe of other coun-
tries j and, fccondly, upon the fertility or bar-
rennefs. of the mines . which may happen at any
particular stime to.fupply the commercial world
with thofe metals. The quantity of thofe metals
in . the . countries moft remote from the min^s,
mufl be more pr lefs afFcfted by this fertility or
JDarrcnnefs, on account of the eafy and cheap
tranlportation of thofe metals, of their, fmall bulk
and^ great value. Their quantity in China and
Indoftan muft have been more or lefs afFefted by
the abundance, of the mines of America.

So far as their quantity in any particular coun-
try depends upon the former of thofe two cir-
cumftances (the power of purchafing), their real
price, like that of all other luxuries and fuper-
fluities, is likely to rife with the wealth and im-
• • •

provement

THE WEALTH OF NATIONS. 373

provement of the country, and to fall with its c hap.
poverty and depreflion. Countries which have a < J .,»
great quantity of labour and fubfift'ence to fpare,
can afford to purchafe any particular quantity of
thofe metals at the expence of a greater quantity
of 'labour , and fubliftence, than countries which
have lefs to fpare.

So far as their quantity in any particular coun-
try depends upon the latter of thofe two circum-
fiances (the fertility or barrennefs of the mines
which happen to fupply the commercial world)
their real price, the real quantity of labour and
fubfiflence which they will purchafe or exchange
for, will, no doubt, fink more or lefs in propor-
tion to the fertility, and rife in proportion to the
barrennefs, of thofe mines.

The fertility or barrennefs of the mines, how-
ever, which may happen at any particular time
to fupply the commercial world, is a circum-
ftance which, it is evident, may have no fort of
connexion with the flate of induftry in a parti-
cular country. It feems even to have no very
necefTary conneftion with that of the world in
general. As arts and commerce, indeed, gra-
dually fpread themfelves over a greater and a
greater part of the earth, the fearch for new
mines, being extended over a wider fiirface,
may have fomewhat a better chance for being
fuccefsful, than when confined within narrower
bounds. The difcovery of new mines, however,
as the old ones come to be gradually exhaufled,
is a matter of the greatefl uncertainty, and fuch
as DO human Ikill or induflry can enfure. All

B b 3 indi-

374 THB NATURE AND CAUSER QF

BOOK indications^ it i$ (cHnQwkdged^ 9re dmW^l,
4nd tbf ^Svidl dircqveiy ^nd Aijcceisfu} wArkiag
Qf ^ new ipiff? c«i afonp afcertaip thp re^iiy of
i^ V91mP> Qf even of its exiftence. In thi3 fearck
therp feeiTi to be nq certain limits eitlier to the
ppflibje fuccefs, or to the poflible difappoint-
meftt of human induftry. In the cpurfc erf" a^
century or two, ^ it is poffible th^t npw mines may
be difcoYpred more fertile than ^qy that h^ve
ever yet been known ; and it is juft equ^y pof-
fible that the mofl: fertile minp .then known may
be more barren than any that was wroi^ght
before tlje difcovery of the mines of America..
Whether the one or the other of thofe two events,
may happen to take place, is of very little im-,
portance to the real wealth and profperity of the.
world, to the real value of the anqu^l produce
of the land and labour of rriankiud* Its no-
minal value, the quantity of gold and filver by
which this annual prpduce cpyld J3e exprefled or
reprefented, would, no doubf, be very different j
but its real v^lue, the real quantity of labour
which it could purchfife or command, would be
precifely the fami:. A Ihilling might in the one
cafe reprefent no more labour than a penny does
at prefent ; and a penny in the other might re-
prefent as much as a fhilling does qow. But in
the ope cafe he who had a fhilling in his pocket,
would be no richer th^n he who h^s a penny at
prefent; and in the other he who had a penny
would be juft as rich a^ he who has a Ihilling
now. The cheapnefs and abundance of gold -
^4 filv^er plate, wpyld be the fole acivaptage

which

THE WEALTH OF NATIONS. 375

which the world could derive from the one event, chap.

XI,

and the dearncfs and fcarcity of thofe trifling fuper- \^-J~^
fluities the only inconveniency it could fufFer from
the other.

Conclujion of the Digrejjion concerning the Variations

in the Value of Silver.

The greater part of the writers who have col-
lefted the money prices of things in ancient
times, feem to have confidered the low money
price of corn, and of goods in general, or, in
other words, the high value of gold and filver,
as a proof, not only of the fcarcity of thofe metals,
but of the poverty and barbarifm of the country
at the time when it took place. This notion ^^/;yi ^jl- '" ^ ""
connefted with the fyftem of political ceconom)| ' ^/-ra*-^ ^
which reprefents national wealth as confifting
the abundance, and national poverty in the
fcarcity, of gold and filver j a fyftem which I fhatf
endeavour to explain and examine at great length
in the fourth book of this . enquiry. I Ihall only
obferve at prefent, that the high value of the
precious metals can be no proof of the poverty
or barbarifm of any particular country at the
time when it took place. It is a proof only of
the barrennefs of the mines which happened at
that time to fupply the commercial world. A
poor country, as it cannot afford to buy more,
fo it can as litde afford' to pay dearer for gold
and filver than a rich one ; and the value of thofe
metals, therefore, is not likely to be higher in
the former than in the latter. In China, a coun-

B b 4 try

t '^'

37^ THE NATURE AND CAUSES OF

B o o K try much richer than any part of Europe, the
value of the precious metals is much higher than
in any part of Europe. As the wealth of Europe,
indeed, has increafed greatly fince the difcovery
of the mines of America, fo the value of gold
and filver has gradually diminilhed. This di-
minution of their value, however, has not been
owing to the increafe of the real wealth of Eu-
rope, of the annual produce of its land and la-
bour, but to the accidental difcovery of more
abundant mines than any that were known, be-
fore. The increafe of the quantity of gold and
filver in Europe, and the increafe of its manu-
faftures and agriculture, are two events which,
though they have happened nearly about the
fame time, yet have arifen from very different
caufes, and have fcarce any natural connection
with one another. The one has ariftn from a
mere accident, in which neither prudence nor
jpolicy either had or could have any fhare: The
other from the fall of the feudal fyftem, and from
the eftablilhment of a government which afforded
to induftry the only encouragement which it
requires, fome tolerable fecurity that it Ihall
enjoy the fruits of its own labour. Poland,
where the feudal fyflem ftill continues to take
place, is at this day as beggarly a country as it
was before the difcovery of America, The
money price of corn, however, has rifen ; the
r^al value of the precious metals has fallen in
Poland, in the fame manner as in other parts of
Europe. Their quantity, therefore, muft have
increafed there as in other places, apd neari^ in

the

THE WEALTH OF NATIONS* J77

the fame proportion to the annual produce of its "xf. ^ *
knd and labour. This increafe of the quantity
of thofe metals, ' however, has not, it feems j in-
creafed that annual produce, has neither im*
proved the manufaftures and agriculture pf the
country, nor mended the circumftances of its in-
habitants. Spain and Portugal, the countries
which polTefs the mines, are, after Poland, perhaps,
the two moft beggarly countries in Europe.
The value of the precious metals, however, muft
be lower in Spain and Portugal than in any other
part of Europe j as' they come from thofe coun-
tries to all other parts of Europe, loaded, not
only with a freight and an infurance, but with
the expence of fmuggling, their exportation being
either prohibited, or fubjcfted to a duty. In
proportion to the annual produce of the land
and labour, therefore, their quantity muft be
greater in*thofe countries than in any other part
of Europe: Thofe countries, however, are poorer
than the greater part of Europe. Though die
feudal fyftem has been abolilhed in Spain and
Portugal, it has not been fucceeded by a much
better.

As the low value of gold and filver, therefore,
is no proof of the wealth and flourilhing ft'ate of
the country where it takes place ; fo neither is their
high value, or the low money price either of goods
in general, or of corn in particular, any proof of
its poverty and barbarifm.

But though the low money price either of
goods in general, or of corn in particular, be no
proof of the poverty or barbarifm of the tifnes,

the

^7« THE NATURE AND CAUSES OF

B o o K the low money price of fomc particular forts of
^^j goods, fuch as cattle, poultry, game of all kiads^
&c. in proportion to that of corn, is a moA de-
clfivc one. It clearly demonftrates, firft, their
great abundance in proportion to that of corn,
and confequently the great extent of the land
which they occupied in proportion to what was
occupied by corn; and, fecondly, the low value
of this land in proportion to that of corn land,
and confequently the uncultivated and unim-
proved date of the far greater part of the lands
of the country. It clearly demonftrates that the
ftock and population of the country did not bear
the fame proportion to the extent of its territory,
which they commonly do in civilized countries,
and that fociety was at that time, and in that
country, but in its infancy. From the high or
low money price either of goods in general, or
of corn in particular, we can infer only that the
mines which at^ that time happened to fupply the
commercial world with gold and filver, were fer-
tile or barren, not that the country was rich or
poor. But from the high or low money price of
feme forts of goods in proportion to that of others,
we can infer, with a degree of probability that ap-
proaches almoft to certainty, that it was rich or
» poor, that the greater part of its lands were im-
proved or unimproved, and that it was either in a
more or lefs barbarous ftate, or in a more or kfs
civilized one.

Any rife in the money price of goods which
proceeded altogether- from the degradation of the
value; of filver, . would affeft all forts of goods

5 equally.

THE WEAtTH OF NATIONS. 379

equally^ and raife their price uniy^rfally a third, chap.
or a fourth, or a fifth part higher, according as
filver happened to lofe a third, or a fourth, or a
fifth part of its former value. But the rife in the
price of provifions, which has been the fubjeA of
fo much reafoning and converfation, does not
affedt dl forts of provifions equally. Taking
the courfe of the prefent century at an average,
the price of corn, it is acknowledged, even by
thofe who account for this rife by the degrada-
tion of the value of filver, has rifen much lef$
than that of fome odier forts of provifions. The •
rife in the price of thofe other forts of provifions,
therefore, cannot be owing altogether to the
degradation of the value of filver. Some othg-
caufes mufl: be taken into the account, and thofe
which have been above afligned, will^ perhaps,
without having recourfe to the fuppofed degra-
dation of the value of filver, fufficiently ex-
plain this rife in' thofe particular forts of provi-
fions vof which the price has actually rifen in pro-
portion to that of corn*

As to the. price of corn itfelf, it has, during
the fixty-four firfl: years of the prefent century,
and before the late extraordinary courfe of bad
feafons, been fomewhat lower than it was during
the fixty-four laft years of the preceding century.
This faft is attefl:ed, not only by the accounts of
Windfor market, but by the public fiars of all
the different counties of Scotland, and by the
accounts of feveral different markets in France,
which have been collefted with great diligence
and fidelity by Mr. MeflTance, and by Mr. DuprS

' \

jgo THE NATURE AND * CAUSES OF

B o o K de St. Maur.^ The evidence is more complete
than could well have been expefted in a matter
which is naturally fo very difficult to be afcer-
tained.

As to the high price of corn during thefe laft
ten or twelve years, it can be fufficientiy ac-
counted for from the badnefs of the feafons,
without fuppoling any degradation in the value
of filver.

The opinion, therefore, that filver is con-
tinually finking in its value, feems not to be
founded upon any good obfervations, either
upon the prices of corn, or upon thofc of other
provifipns.

4 The fame quantity of filver, it may, perhaps,
be faid, will in the prefent times, even accord-
ing to the account which has been here given,
purchafe a much fmaller quantity of feveral forts
of provifions than it would have done during
fome part of the laft century ; and to afccrtain
whether this change be owing to a rife in the
value of thofe goods, or to a fall in the value of
filver, is only to eftablifli a vain and ufelefs dif-
tinftion, which can be of no fort of fervice to
the man who has only a certain quantity of filver
to go to market with, or a certain fixed revenue
in money. I certainly do not pretend that the
knowledge of this diftindtion will enable him to
buy cheaper. It may not, however, upon that
account be altogether ufelefs.

It may be of fome ufe to the public by afford-
ing an eafy proof of the profperouS' condition of
the country. If thd rife in the price of fome

forts

THE WEALTH OF NATIONS. 381

forts of provifions be owing altogether to a fall c h a p,
in the value of filver, it is owing to a circum-
ftance from which nothing can be inferred but
the fertility of the American mines. The real
wealth of the country, the annual produce of its
land and labour, may, notwithilanding this cir-
cumftance, be either gradually declining, as in
Portugal and Poland j or gradually advancing, as
in moft other parts of Europe. But if this rife in
the price of fome forts of provifions be owing to
a rife in the real value of the land which pro-
duces them, to its increafed fertility; or, in
confequence of more extended improvement and
good cultivation, to its having been rendered fit
for producing corn ; it is owing to a circum-
ftance which indicates in the cleareft manner the
profperous and advancing ftate of the country.
The land conftitutes by far the greateft, the moft
important, and the moft durable part of the
weakh of every extenfive country. It may furely
be of fome ufc, or, at kaft, it may give fome fa-
tisfadion to the Public, to have fo decifive a
proof of the increafing value of by far the great-
eft,, the moft important, and the moft durable
part of its wealth.

It may too be of fome ufe to the Public in
regulating the pecuniary reward of fome of its
inferior fervants. If this rife in the price of
fome forts of provifions be owing to a fall in the
value of filver, their pecuniary reward, provided
it was not too large before, ought certainly to
be augmented in proportion to the extent of
this falL If it is not augmented, their real re-
compense

til Tflfi NATURE AND CAtTSES OF

■ ©OK compence will evidently be (o much diminiffiecf*
But if this rife of price is owing to the increafed
yalue^ in confeqnencc of the inipi-oved femEty
of the land which produces fuch proVifi6ns, it
becomes a much nicer matter to jiftlge either in
what proportion any pecuniary rfeward ought to
be augment}dd> or whether it ought to be aug-
mented at ail. The extenfion of ifnp^ovienMn^
and cultivation, as it neccflkrily iPaifes more or
Jcfs, in prbportion to the price of 6drfl, tflal: of
every fort of animal food, fo it as nt^dlaritjr
lowers that of, I believe, every fort of vtgetabU
food. It raifes the price of aninial foods be-
caufe a great part of the laAd which produces it,
being rendered fit for producing corn, muft af*
ford to the landlord and farmer the rent and
profit of corn land. It lowers the price of vege-
table food ; becaufe, by increafing the fertility of
the land, it increafes its abundance. The irii-
provements of agriculture too introduce many
forts of vegetable food, which, requiring lefe
land and not more labour than corn, corhe much
cheaper to market. Such are potatoes and niaize,
or what is called Indian corn, the two moft im-
portant improvements which the agriculture of
Europe, perhaps, which Europe itfelf, has received
from the great extenfion of its commdrce and na-
vigation. Many forts of vegetable food, bcfides,
which in the rude fl:ate of agriculture are con-
fined to the kitchen-garden, and raifcd only by
the fpade, come in its improved fl:ate to be in-»
troduced into common fields, and to be raifed
by the plough : fuch as turnips, carrots, cab-
bages.

THE WEALTH OP NATIONS* 3^

bages, &€• If in the progrefs of improve- <^ n A P.
ment, therefore, the real price of one (pecies of
food necefl&rily rifes, that of another as neceffa-
rily falls, and it becomes a matter of more
nicety to judge how far the rife in the one may
be compenfated by the fall in the other. When
the real price of butcher's-meat has 6tic6 got to
its height (which, with regard to every Iprt,
except, perhaps, that of hogs flefli, it feems td
have done through a great part of England
more than a century ago), atxy rife which can af-
terwards happen in that of any other fort of ani-
mal Ibod, cannot much afFetft the circumftahces
of the inferior ranks of people. The circurti^
ftances of the poor through a great part of Eng-
land cannot furiely be (b much diftrefled by any
rife in the price of poultry, fifh, wild-fowl, or
venifon, as they muft be relieved by the fall in
that of potatoes.

In the prefent feafon of fcarcity the high price
of corn no doubt diftreflfes the poor. But in
times of moderate plenty, when com is at its or-
dinary or average price, the natural rife in the
price of any other fort of rude produce cannot
much affeft them. They fufFer more, perhaps^
by the artificial rife which has been occafioned by
taxes in the price of fome manufactured commo*
ditics J as of /alt, foap, leather, candles, malt,
bett*, and ale, &c, ^

Efeffs

3«4 THE NATURE AND CAUSES OF

EffeSlscftbe Progrefs of Improi/ement upon the real

Price of ManufaStures*

T T IS the natural ^fFedt of improvement, how-
ver, to diminifti gradually the real price of
almoft all manufactures. That of ihe-manufac-
turing workmanflnp diminifties, perhaps, in all
of them, without exception. In confequcnce of
better machinery, of greater dexterity, and of a
more proper divifion and diftribution* of work,
all of which arc the natural effcfts of improve-
ment, a much fmaller quantity of ^^ labour be-
comes rcquifite for executing any particular
piece of work ; and though, in confequence of
the flourifhing circumftances of the fociety, the
real price of labour Ihould rife very confiderably,
yet the great diminution of the quantity will ge-
nerally much more than compenfate the greateft
rife which can happen in the price.

There are, indeed, a few manufaftures, in
which the neceflary rife in the real price of the
rude materials will more than compenfate all the
advantages which improvement can introduce
into the execution of the work. In carpenters
and joiners work, and in the coarfer fort of cabi-
net work, the neceflary rife in the real price of
barren timber, in confequence of the improve-
ment of land, will more than compenfate aU the
advantages which can be derived frona the beft
machinery, ' the greateft dexterity, and the moft
proper divifion and diftribution of work.

But

THE WEALTH OF NATIONS. 385

^ But in all cafes in which the real price of the chap.
rude materials either docs not rife at all, or does
not rife very much, that of the manufafturcd
commodity finks very confiderably.

This diminution of price has, in the courfe of
the prefent and preceding century, been moft re-
markable in thofe manufaftures of which the
materials are the coarfer metals. A better move-
ment of a watch, than about the middle of the
lafl: century could have been bought for twenty
pounds, may now perhaps be had for twenty
ihillings. In the work of cutlers and lockfmiths,
in all the toys which are made of the coarfer
metals, and in all thofe goods which are com-
monly known by the name of Birmingham and
Sheffield ware, there has been, during the fame
period^ a very great redudion of price, though
not altogether fo great as in watch-work. It
has, however, been fufficient to aftonifh the
tvorkmcn of every other part of Europe, who in
many cafes acknowledge that they can produce
no work of equal goodnefs for double, or even
for triple the price. There are perhaps no ma-
nufaftures in which the divifion of labour can be
carried further, or in which the machinery em-
ployed admits of a greater variety of improve-
ments, than thofe of which die materials are the
coarfer metals.

^ In the clothing manufadture there has, during
the fame period, been no fuch fenfible redudtion
©f price. The price of fuperfine cloth, I have
been affured, on the contrary, has, within thefe
five- and- twenty or thirty years, rifen Ibmewhat
Vol. L Cc in

JS6 THE NATURE AND CAUSES OF

B o o K in proporrion to its quality ; owing^ it was. fai<J,
to a cOnfiderablc rife in tl}c price of the mate^
rial, which toniifts altx^ether of Sp^nifli wooL
That of the Yorkfhire cloth, which is made al-»
together of Englifh wool, is faid indeed^ during:
the courfe of the prcfent century, to have fallen
a good deal in proportion to its qiiality; Qua-
lity, however, is fe very difpusablc a nmtter>
that I look upon all information of this kind as
fomewhat uncertain^ In the dothing manu*
fa6ture> the divifion of labour is nearly the £unc
now as it was a century ago, and the machinery
employed is not very difierent* There may,
however, have been fome fmall improvennents in
both^ which may have occafioned fome reduftioa
Cj^rprice*

But the rcckiAion will appear much more fen^
fible and undeniable^ if we compare the price of
this manufafture in the prefent times with what
it was in a much remoter period,' towards the end
of the fifteenth century, when the labour was
probably much lefs fubdivided, and the ma-
chinery employed much more imperfe6k> than ic
is at prefent.

In 1487,^ being the 4th of Henry VIL it was
enafted, that " whofoever fliaU fell by retail a

broad yard of the fineft fearlet grained, or of

other grained cloth of the fineft makings
'^ above fixteea Ihillings,. fhafl forfeit forty fhil-
** lings for every yard fo fold/^ Sixteen jQiii-
lings,. therefore, containing about the iame
quantity of filver as four-and-^twenty (hillings o^
x)ur prefent money, was, at that time, reckoned

not

*fHE WEALtH OP NATIONS. J87

not an tlnre^fonable price for a yard of the fineft c » a p.
cloth; and ^s this is a fumptaary law, fuch
cloth, it is probable, had ufually been fold
fomewhat dearer. A guinea may be reckoned
the higheft price in the prefent times. Even
though the quality ^ of the cloths, therefore,
(hould be fuppofed equal, and that of the prefenc
times is moft probably much fuperior, yet, even
lipon this fuppofitionj the money price of the
fineft cloth appears to have been confiderably re*-
duced fince the end of the fifteenth century. But
its real price has been much more reduced. Sit
Ihillings and eight-pence was then, and long
afterwards, reckooed the average price of a quar-
ter of wheat. Sixteen {hillings, therefore, - was
the price of two quarters and more than three
bulhels of wheat. Valuing a quarter of wheat
In the prefent times at eight-and-twcnty (hillings,
the real price of a yard of fine cloth muft, in
thofe timesj have been equal to at leaft three
pounds fix fhillings and fixpence of our prefent
money* The man who bought it muft have
parted with the command of a quantity of labour
and fubfiftence equal to what that ftim would pur-
Chafe in the prefent times.

The redudlion in the real price of the coarfe
manufafture, though confiderable, has not been fo
great as in that of the fine. s

In 1463, being the 3d of Edward IV. it was
cnafted, that " no fervant in husbandry, nor
" common labourer, nor fervant to any artificer
" inhabiting out of a city or burgh, Ihall ufe or
*^ wear in their clothing any cloth above two

C c a «« Ihillings

iU THE NATURE AND CAUSES OP

*' (hillings the broad yard." In the 3d o^
Edward IV. two Ihillings contained very near-
ly the fame quarttity of filver as four of our
prefent money. But the Yorkftiire cloth which
is now fold at four Ihillings the yard, is probably
much fuperior to any that was then made for the
wearing of the very poorefl: order of common
fervants. Even the money price of their cloth*
ing, therefore, may, in proportion to the qua-
lity, be fomewhat cheaper in the prefent than it
was in thofe ancient times. The real price is
certainly a good deal cheaper. Ten-pence was
then reckoned what is called the moderate and
reafonable price of a bufhel of wheat. Two
Ihillings, therefore, was the price of two bulhels
and near two pecks of wheat, which in. the
prefent times, at three Ihillings and fixpence
the bufhel, would be worth eight (hillings and
-nine-pence. For a yard of this cloth the poor
fcrvant muft have parted with the power of pur-
chafing a quantity of fubfiflence equal to what
eight lliillings and nine-pence would purchafe in
the prefent times. This is a fumptuary law too,
reflraining the luxury and extravagance of the poor.
Their clothing, therefore, had commonly been
much more expenfive.

The fame order of people are, by the lame
law, prohibited from wearing hofe, of which the
price fhould exceed fourteen- pence the pair^
equal to about eight-and-twenty pence of our
prefcnt money. But fourteen- pence was in thole
times the price of a > bufhel and near two pecks of
wheat > which, in tht prefent times, at three and

fixpence

THE WEALTH OF NATIONS. 389

fijcpence the bulhel, would coll five Ihillings and^ hap.
three-pence. We fhould in the prefent tiaies
confider this as a very high price for a pair of
(lockings to a fervant of the pooreftand loweft
order. He muft, however, in thofe tinnes have
paid what was really equivalent to this price for
them.

In the time of. Edward IV. the art of knitting
(lockings was probably not known in any part of
Europe. Their hofe were made of common cloth,
which may have been one of the caufes of their
dearnefs. The firft perfon that wore (lockings in
England is faid to have been Queen Ehzabeth.
She received them as a prefent from the Spanifh
amba(rador.

Both in the coar(e and in the fine woollen
manufafture, tlie machinery employed was much
more imperfedb in thoie ancient, than it is in the
prefent times. It ha$. fince received three very
capital improvements, befides, probably, many
fmaller ones of which it may be difficult to
afcertain cidier the number or the importance.
The three capital improvements are : firft. The
exchange of the rock and fpindlc for the (pin-
ning-wheel, which, with the fame quantity of
labour, will perform more than double the quan-
tity of work. Secondly, the ufe of feveral
very ingenious machines which facilitate and
abridge in a ftill greater proportion the windiijg
of the worfted and woollen yarn, or the proper
arrangement of the warp and woof before they
are put into the loom -, an operation which, pre-

C c 3 * viovis

390 THE NATURE AND CAUSES OF

BOOK vious to the invention of thole machines, muft
I.

have been extremely tedious and troublefome.

Thirdly, The employment of the fulling mill

for thickening the cloth, inftead of treading it in

water. Neither wind nor water mills of any

kind were known in England fo early as the

beginning of the fixteenth century, nor, fo far

as I know, in any other part of Europe north of

the Alps, They had been introduced into Italy

fome time before.

The confideration of thefe circumftances may,
perhaps, in fome meafure explain to us why thq
real price both of the coarfe and of the fine ma-
nufa<!:hire, was fo much higher in thofe ancient,
than it is in the prefent times. It coft a greater
quantity of labour to bring the goods to market.
When they were brought thither, therefore,
they muft have purchafed or exchanged for the
price of a greater quantity.

The coarle manufafture probably was, in
thofe ancient times, carried on i|i England, iq
the fame manner as it always has been in coun-
tries where arts and manufadlurcs are in their in-
fancy. It was probably a houfliold manufadhire,
in which every different part of the work was
occafionally performed by all the different mem-
bers of almoft eyery private family; but fo as to
be their work only when they had nothing elfe
to do, ^d not to be the principal bufinefs froi"n
v/hich any of them derived the greater part of
their fubfiftence. The work which is performecl
ir^ this manner, it has already b?^n obferved^

comes

THE WEALTH Of' NATIONS. 39«

comes always much cheaper to market than that c. h a p.
which is the principal or fole fund of the work-
cnan's fubfiftence. The fine mamifafture, on the
other hand, was not in thofe times carried on
ia Englan4^ but in the rich and ^commercial
country of Flanders ; and it was probably con-
duced then, in the fame manner as now, by
people who derived the whole, or the principal
part of their fubfiftence from it* It was befides
a foreign manufadure, and muft have paid fomc
duty, the ancient cuftom of tonnage and poundage
at leaft, to the king. This duty, indeed, would
pot probably be very great. It was not then the
policy of Europe to reftrain, by high, duties^
the importation of foreign manuf^^ftures, but
rather to encourage it, in order that merchants
might be enabled to fupply, at as eafy a rate as
poflible, the great men with the conveniencies
and luxuries which they wanted, and which the
induftry of their own country <:ould not afford
them. ,

The confideration of thefe circumftances may
porhaps in fome meafare explain to us why, in
thofe ancient times, the real price of the coarfc
manufadure was^ in proportion to that of the
fene^ fo much Jower than in the prcfent times-

Cc 4 Con-

$gz THE NATURE AND CAUSES Of

Conclusion of the C h a p t £ R.

T SHALL conclude this very long chapter
with obferving that every improvement in the
circumftances of the fociety tends either dire^ly
or indireftly to raife the real rent of land, to in-
orcafe the real wealth of the landlord, his power
of purchafing the labour, or the produce of the
labour of other people.

Th:^ extcnfion'of improvement and cultivation
tends^ to raife it drreftly. The landlord's Ihare
of the produce neceflarily increafes with the in-
creafe of the produce.

That rife in the real price of thofe parts of
the rude produce of land, which is firft the effedt
of extended improvement and cultivation, and
afterwards the caufe of their beinsr ftill further
extended, the rife in the price of cattle, for ex-
ample, tends too to raife the rent of land dl-
reftly, and in a ftill greater proportion. The
real value of the landlord's (bare, his real comr-
mand of the labour of other people, not only
rifes with the real value of the produce, but the
proportion of his (hare to the whole produce
rifes with it. That produce, after the rife in its
real price, requires no more labour to colleft \%
(than before. A fmaller proportion of it will,
therefore, be fqfiicient to replace, with the ordi-
nary profit, the ftock which employs that labour.
A greater proportion of it niuft, conlequently,
belong to the landlord,

Ali,

THE WEALTH OF NATIONS. 393

All thofe improvements in the produftive chap.
powers of labour, which tend dircftly to reduce
the real price of manufaftures, .tend indireftly tp
raife the real rent of land. The landlord ex--
chfinges- that part of his rude produce, which is
over and above his own confumption, or what
comes to the fame thing, the price of that part of
it, for manufaftured produce. Whatever re-
duces the real price of the latter, raifes that of
die former. An equal quantity of the former
becomes thereby equivalent to a greater quantity
of the latter; and the landtord is enabled to
purchafe a greater quantity of the convenicncies,
ornaments, or luxuries, which he has occafion
for.

Every incrtafe in the real wealth of the fo^
ciety, every increafe in the quantity of ufeful
labour employed within it, tends indireftly to
raife the real rent of land. A certain propor-
tion of this labour naturally goes to the land.
A greater number of men and cattle are em-
ployed in its cultivation,, the produce increafcs
with the increafe of the ftock which is thus em-
ployed in raifing it, and the rent increafes with
the produce.

The contrary circumftances, the negleft of
cultivation and improvement, the fall in the real
price of any part of the rude produce of land,
the rife in the real price of manufaftnrcs from
the decay of manufafturing art and induftry, the
declenfion of the real wealth of the fociety, all
jend^ pn the other hand, to lower the real rent

39+ THE NATURE AND CAUSES OF

B o o K of land, to reduce the real wealth of the land»
* ; lord^ to diminiib his power of purchasing either
the labour, or the produce of the labour of other
• people.

The whole annual produce of the land and
labour of every country, or what comes to the
fanne thing, the whole price of that annual pro-
duce, naturally divides itfelf, it has already been
ohfervcd, into three parts j the rent of land, the
wages of labour, and the profits of flock i and
conflitutes a revenue to three different orders of
people i to thofe who live by rent, to thofc who
live by wages, and to thofc who live by profit,
Thefe.iu'e the three ^reat, original and confli-
tuent orders of every civilized fociety, from whofe
revenue that of every other order is ultimately
derived*

The intcrefl of the firfl of thofe three great
orders, it appears from what has been jufl now
faid, is Ibriaiy and infeparably connefted with
the general intercfl of the fociety. Whatever
either promotes or obflrufts the one, neceffarily

*^ ^ promotes or obftrudts the other. When the
public deliberates concerning any regulation
of commerce or police/ the proprietors of land
never can miflead it, with a view to^promote the
interefl of their own particular order ; at leafl, if
they have any tolerable knowledge of that in-
terefl. They are, indeed, too often defe&ive in
this tolerable knowledge. They are the only
one of the three orders whofe revenue cofls thern
neither labour nor care, but corner to then>, as

THE WEALTH OF NATIONS. 395

it were, of its own accord, and independent of c h a p.
any plan or projeft of their own. Thaf indo-
lence, which is the patural efFeft of the eafc
and fecurity of their fituation, renders them too
often, not only ignorant, but incapable of that
application of niind which is neceflary in order
to forefee and landerftand the confequences of any
public regulation.

The intereft of the fecond order, that of thofe
who live by wages, i$ as ftriftly connefted with
the intereft of the fociety as that of the firft* The
wages of the labourer, it has already been fhewn,
are never fo high as when the demand for labour
is continually rifing, or when the quantity em-
ployed is every year increafing confiderably.
When this real wealth of the fociety becomes
ftationary, his wages are foon reduced to what is
b^ely enough to enable him to bring up a fa-
fnily, or to continue the race of labourers.
When the fociety declines, they fall, even below
this. The order of proprietors may, perhaps,
gain more by the profperity of the fociety, than
that of labourers : but there is no order that
fufFers fo cruelly from its decline. But though
the intereft of the labourer is ftriftly conneAed
with that of the fociety, he is incapable either of
comprehending that intereft, or of underftanding
its connexion with his own. His (condition
leaves him no time to receive the neceflary in-
formation, and his education sand habits are
commonly fuch as to render him unfit to judge
f VCn rfipugh he was fully informed. In the

public
6

yfi^ THE NATURE AND CAUSES OF

BOOK publrc deliberations, therefore, his voice is Jittlc
heard and lefs regarded, except upon lbm« par-
ticular occafions, when his clamour is animated^
fet on, and fupported by his employers, not for
his, but their own particular purppfes.

His employers conftitute the third order, that
of thofe who live by profit. It is the ftock that
is employed for the fake of profit, which puts
into moripn the greater part of the ufeful labour
of every (bciety. The plans and projcdts of the
employers of ftock regulate and direft all the
moft important operations of labour, and profit
is the end propofed by ^11 thofe plans and pro-
jefts. But the rate of profit does not, like rent
and wages, rife with the profperity, and fall
with the declenfion, pf the fociety. On the con-
trary, it is natur^ly low in rich, and high in
poor countries, and it is always higheft in the
countries which are going fafteft to ruin. The
intercit of this third order, therefore, has not the
fame connexion with the general intereft of the
fociety as that of the other two. Merchants and
mailer manufadlurers are, in this order, the two
clafles of people who commonly employ the
largeft capitals, and who by thek wealth draw to
themfelves the greateft (hare of the public * con-
fideration. As during their whole lives they arc
engaged in plans and projefts, they have fre-
quendy more acutenefs of underftanding than
the greater part of country gentlemen: As their
thoughts, however, are commonly exercifed rather
^bput the intereft of their own particular branch

THE WEALTH OF NATIONS. 397

of bufinefs^ than about that of the fociety, their chap.
judgment, even when given with the greatcft ^,-^A.^
candour (which it has not been upon every oc-
cafion), is much more to be depended upon with
regard to the former of thofc two objefts, than
with regard to the latter. Their fupcriority over
the country gentleman i«, not fo much in their
knowledge of the public intereft, as in. their
having a better knowledge of th^ir own intereft
than he has of his. It is by this fuperior know-
ledge of their own intereft that they have fre-
quently impofed upon his generofity, and per-
fuaded him to give up both his own intereft and
that of the public, from a very fimple but
honeft conviftion, that their intereft, and not p .

his, was the intereft of the publit. The intereft'*^*'''''" ^ ^"^ ^
of the dealers, however, in any particular branch^^^'*^*^*^ '^'- -
of trade or manufadtures, is always in fome re- '

fpefts different from, and even oppoGte to, that
of the public. To widen the market and to
narrow the competition, is always the intereft of
the dealers. To widen the market may fre^ )

quently be agreeable enough to the intereft of
the public; but to narrow the competition muft'
always be againft it, and can ferve only to ei;iable
the dealers, by raifing their profits above what
they naturally would be:, to levy, for their own
benefit, an abfurd tax upon the reft of their
fellow- citizens. The propofal of any new law
or regulation of commerce which comes from
this order, ought always to be liftened to with
great precaution, and ought never to be adopted

till

35«

THE NATURE AND CAUSES OP

BOOK till after having been long and carefully examinee!^
p, not only with the mod: fcrupulous, but with the
moft fufpicious attention. It comes from an order
of men, whole intereft is never exadly the fame
with that of the public, who have generally an
interefl to deceive and even to opprefs the public,
and who accordingly have, upon many occafions^
both deceived and oppreffed it.

1202

PHc..f .h.Q».r«rof|*-:5: ^^^,^
Wheat each Year.

fame Ycaf.

The 4ivetage Price of
each Year io Mcoejr
of the prefeat Tidlef .

£. s. d.

13 5

5 12

—•94

Total,' 35 9 3
Average Price,

2 19- i|

«*r

THE WEALTH OP NATIONS.

399

Yean

XII.

Prtce «f the Q^trter of

Wheat eftch Year*

Avtrage of the dif
ferent Prices of tb^
ftme Year.

■MM«Ub

£. s. d.

The Average PtUe of c H A P.
eacn Year in Money y|
of the ptefent Times.

I TO

I 19

2 8

— 12

I I

3 —

4 II

6
10

I 10 4-*

5 r« 6

Total, 23 4 II J

Average Price, ' i 1 8 8

400

BOOK Ir^T^n
I. XII.

THE NATURE AND CAUSES OP

1339

1349

1359
1361

1369

U79
1387

1390

1401
1407
14161

Price of the Quarter of
Wheat each Year,

Average of the dif-
ferent Prices of the
fame Year.

The average Price of
each Year in Mon^y
of the prefent Times.

£■

s. d.

9 —

2 —

4
4

14
16

3
16

jC- •^- ''•

14 5

» 7
•^ 5

3- 2
•^ 4

» 15

— 3 10

Total,
Average Price,

" 9

- 4

» 13

I 17

- 8

I 12

TotaU
Average Price,

2
2
8

294

4
8

4
II

15 9 4

i^ IS 4
I 1 3i

THE WEALTH OF NATIONS.

401

Veart

XII.

Price of the Qparter of
Wbeic Cdcb V«ar.

^^S3
1455

H57

HS9
1460

1463

1464
i486
1491
1494

1495
1497

£'

s, d.

5 4
8

1499

1564]
1521

1551
1553
1554

1555
1556

1557

1558

1559
1569

5
8

8
8

Avenge of the di6fer-

ent Frjctts of th^
fame Year.

£. s. ,d.

1 :io

— 34

The ireragePiice 6f qua I».
each Year in Wonn'y j^i^

of ibe prefent Times,

;£.

15
16

3 8

I
I

17
%
6

!Total,
Average Price,

*> "d

- 14 I

— 4 —
"11

8 —

4 —

5 —
8 —

13 4
8 —

8 —
8 —

£,, s. d.

- 8
I 10

d.
6

17 8f

Vol. I.

Total,
Average Price,
Dd

— 17 n

~"6 o 2J

ifiZ

THE NATURE AND CAUSES Ot

Yetti

XII.

Price of the Qarter of
Wheat och y«ar.

561

562

574

587
594

595
596

597
598

600
601

2
4

2
I
I
I

4
16

{r:=}

Avenge of the dilKer
ent Prices of the
frme Year.

14 10

i. S. d.

4 12

The tvertge Price of
each Year in irfoney
of the prelent Times.

^. S. d.

— 8 —

— '8 r-

3 4
2 16

2 13

4 —

2
I
I
I

16 8
19 2

17 8
14 10

Total, 28 9 4

Average Price, 27 5f

*ntE WEALTH OF NATIONS.

403

Prices of the garter bf nine Sujhels, of the beji or
bigh^ priced fFbeat at Windfor Market^ oH
Lady-D(r^tind Mkbaehnasyfrom 1595 to 1764,
botb incluft^e \ tbe "Price of each Tear being the
Medium between the higheji Prices of thoje Two
Market-days.

Years

£,' J.

d. ,

Years.

L *.

I595>

— ta 2. 0

0 ,

1621,

— I 10

1596,

— 2, ^

1622,

— 2 18

1597.

— 39

1623,

— 2 12

1598,

— ^ 2. 16

1624,

— 28

»599.

— I. 19

1625,

— 2 12

1600,

— I. 17

8 ,

i626>

— 2 ^

1601,

— I 14

1627,

— I 16

l602.

_ I 9

1628,

— I 8

i6oj.

— I 15

1629,

—.2 2

1604,

— I 10

1630,

— 2 15

1605,

— I 15

i63i>

- 3 8

i6o6>

— I 13

1632,

— 2 13

1607,

— I 16

^(>33y

— 2 i{i

1608,

— 2. 16

1634,

— 2 16

1609,

— 2 10

i635>

— 21^

1610,

— I 15

1636,

— 2 16

1611,

— I 18

— — —

1612,

— 22

16)40 0

i6i3>

— 28

1614,

— 21

2 10

1615,

— I 18

1616,

— 20

- 'A

1617,

— 28

1618,

— 26

■

161J,

— I 15

l620»

— I 10

26)54 0

2 I

6t't

Dd 2

•*

404

Years*

637
638

640
641
642

643

644
645

646

647

64$

649

650

651

652

653
654

655
656

657

658

659

660

661

662

663

664

665

666

667

668

669

670

THE NATURE AND CAUSES OF

Wbeit per qaarter.

■% •* S Jl

2 <3

2 17

2 4

2 8

vo'S^O o

= c ^ •« > o o

5 S 2 :S JK O O

> M »^ 0.(14

— 18

— 3 13

— 4 5
^40

— 3 16

— 3 13

— 2 9

— I 15

— I .6

— I 13

— 23

— 2 6

-'3 5

— 3 6

— 2 16

— 3 10
'— 3 H

— 2 17

— 20

— 2 9

— I 16
.— I 16

— 20

— 2 4

— 2 I

4
10

4
6

4
o

4
8

Carry over, 79 14 10

.-^

Wheat pe** qii«n€r«

Years. j^. j* J^

Brought ovcr,7 9 14 ip

671, — 2 2 d

672, — 210
673* ~ 2 6 8
674, — 38.8
675* — 348

676, — I 18 o

677, — 1 2' o

678, 2 19 Q

679, —.300

680, 250

681, -»- 268

682> — 240

6*83, -^ 200

684, -*- 240

685^ ---268

686, -^ I 14 o

687^ ---152

688, — 260

689, -1- 1 10 o

690, -*- I 14 8

691, -^ I 14 o

692, — 268

^93y — 3 7 8

694* —340

695, — 2 13 o

696* — 31^0

697> — 3 <> o

698, — 3 8 4

699* —340

700, -^ 200

60) 153 I 8

a^ II oj

THE WEALTH OF NATIONS.

40J

Years.

701

702

703

704
705

706

707

708

709
710

711
712

713
714

715
716

717

718
719

720

721

722

723

7M
725

726

727

728

729

730
731
732
733

Wheat per quarter.

I
I
I

2
I
I
I

9
16

14
6

3
8

5
18

17
16

17
8

14
6

8
6
o
6
o
o
6
6
6
o
o

4
o

10
o
o
6
o
8
o
6
o
o
6

10
6

10
8

Carry over, 69 8 8

Years. j^.
Brought over, 69

734

735
736

737
738

739
740

741
742

743
744

746

747
748

749
750

751
752

755
754

755

756

757

758

759*
760,

76r,

762,

763.
764,

64 ) 129 ^3 6

2 o

Dd 3

4«6

THE NATURE AND CAUSES OF

Years.

1732,

i733>
1734.

I735>
1736,

1737.
1738,

i739>
I740>

Wbett per qnarter.
— I I a 10

— I 6 8

— 184

— I 18 10

— 230

— 204

■— I 18 o

— I 15 6

— I 18 6

— 2 10 8

10) 18 12 8

I. 17 3t

Years.

1741.
.1742,

1743?
1744,

1745.
1746,.

1747.
1748,

1749.
1750*

\)^heat per quarter «
^. S. di

• 2 6 8L

' \ 14 Q

• I 4 10

- I 4 10

- I. 7 6.
■ I. 19 o.

- I 14 10
o

\ 17
\ 17

I 12

10 ) 1.6 18 2

THE WEALTH OF NATIONS. 407

BOOK II.

Of the Nature, Accumulation, and Employ-
ment of Stock.

INTRODUCTION.

IN that rude ftate of fociety in which there is introdoft.
no divifion of labour, in which exchanges are
feldom made, and in which every man provides
every thing for himfelfi it is not neceflary that any
ftock fliould be accumulated or ftored up before-
hand, in order to carry on the bufinefs of the
fociety. Every man endeavours to fupply by
his own induftry his own occafional wants as they
occur. When he is hungry, he goes to the foreft
to hunt; when his coat is worn out, he clothes
himfelf with the fkin of the firft large animal he
kills : and. when his hut begins to go to ruin, he
repairs it, as well as he can, with the trees and
the turf that are neareft it.

But when the divifion of labour has once
been thoroughly introduced, the produce of a
man's own labour can fupply but a very fmall
part of his occafional wants. The far greater
part of them are fupplied by the produce of other
mens labour, which he purchafes with the pro-
duce, or, what is the fame thing, with the price
of the produce of his own. But this purchafe

D d 4 cannot

40« THE NATURE AND CAUSES OF

BOOK cannot be* made till fuch time as the produce c^f
his own labour has not only been complctedji
but fold. A ftock of goocjs of different kinds,
therefore, muft be ftored up fomewhere fufficient
to maintain him, and to fupply him with the
materials and tools of his work, till fuch time, at
leaft, as both thefe events can be brought about.
A weaver cannot apply himfelf entirely to his pe-
culiar bufinefs, unlefs there is beforehand ftore4
up fomewhere, either in his own polSeflion or in
th^t of fome other perfbn, a ftock fuffipent to main-
tain him, and to fupply him with the niaterials
and tools of his work, till he has not only coni-
pleted, but fold his web. This accumulation
muft; evidently, be previous to his applying his
induftry for fo long a time to fuch a peculiar bu-
finefs.

jfl^s the accunfiulation of ftock muft, in the na-
ture qf things, be previous tq the; divifion of la-
bour, fo labour can be more and more fubdividr
ed in proportion oqly as ftock is previoufly more
and more accumulated^ The quantity of ma-
terials which the fame number of people can
work up, increafes in a great proportion as la-
bour comes to be more and more fubdivided ; and
as the operations of each workman are gradually
reduced to a greater degree of fimplicity, a va-
riety of new m.achines come to be invented for
facilitating and abridgirig thofe operations. As
the divifion of labour advances, therefore, in
order to give conftant employment to an equa|
number of workmen, an equal ftock of provi-
fions, and a greater ftock of materials and took

thar^

THE WEALTH OF NATIONS. . 409

tlian what would have been neceffary in a ruder imrodua.
ftate of things, muft be aecunnulated before-
hand. But the number of workmen in every
branch of bufinefs generally increafes with the di-
vifion of labour in that branch, or rather it is the
increafe of their number which enables them to
clafs and fubdivide themfelves in this manner.

As the accumulation of ftock is previoufly
neceflary for carrying on this great improve-
ment in the produftive powers of labour, fo that
accumulation' naturally leads to this improve-
ment. The perfon who employs his ftock in
ipnaintaining labour, neceflarily wifties to employ
it in fuch a manner as to produce as great a
quantity of work as poffible. He endeavours,
therefore, both to make among his workmen the
mpft proper diftribution of employment, and tp
flirnifli them with the beft machines which he
can either invent or aflFord to purchafe. His
abilities in both thefe refpefts are generally in
proportion to the extent of his ftock, or to the
pumber of people whom it can employ. The
quantity of induftry, therefore, not only increafes
in every country with the increafe of the ftock
which employs ir, but, in confequence of that
increafe, the fame quantity of induftry produces a
niuch greater quantity of work.

Such are in general the efFefts of the increafe of
ftock upon induftryand its produftive powers.

In the following book I have endeavoured
%o explain the nature of ftock, the efFefts of its
accumulation into capitals of different kinds,
and the efFefts of the different employments of

thofc

410 THE NATURE AND CAUSES- OF

B o^ o K thofe capitals. This book, is divided into five
chapters. In the firft chapter, I have endea-
voured to fhow what are the difFerent parts- or
branches into which the dock, either of an indi-
vidual, or of a great fociety, naturally divides
itfelf. In the fecond, I have endeavoured to ex-
plain the nature and operation of money con-
iidered as a particular branch of the general
(lock of the fociety. The ftock which is accu-
mulated into a capital, may either be employed
by the perfon to whom it belongs, or* it may be
lent to fome other perfon. In the third and
fourth chapters, I have endeavoured to examine
the manner in which it operates in both thefe
fituations. The fifth and laft chapter treats of
the difFerent efFefts which the difFerent employ-
ments of capital immediately produce upon the
quantity both of national induflry, and of the
annual produce of land and labour.

CHAP. I.

Of the Divijion of Stock.

WHEN the flock which a man pofFefFes is
no * mor^ than fufHcient to maintain him
for a few days ^ or a few weeks,- he feldom thinks
of deriving any revenue from it. He confumes
it as fparingly as he can, and endeavours by his
labour to acquire fomething which nuy fupply
its place before it be confumed altogether. His

revenue

THE WEALTH OE NATIONS. 411

revenue is, in this cafe, derived from his labour chap.
only;. This is the ftate of the greater part of the '*
labouring poor in all countries.

But when he poflefles (lock fufficient to main-
tain him for months or years, he naturally endea-
vours to derive a revenue from the greater part
of it J referving only fo much for his immediate
confumption ^s may maintain him till this re-
venue begins to come in. His whole .ftock,.
therefore, is difl:inguifh,ed into two parts. That
part which, he expedls, is to afford him this re-
venue, is called his capital. The other is that
which fupplies his immediate confumption ; andi
which confifts either, firft, in that portion of his,
whok ftock which was originally relcrved for
this purpofe; or, fecondly, in his revenue, from,
whatever fource derived, as it gradually comes
in ', or, thirdly, in fuch things as had been pur-
chafed by either of thefe in former years, and^
which are not yet entirely confumed y fuch as a
ftock of clothes, houfehold furniture, and the
like. In one, or other, or all of thefc three,
articles^ confifts the ftock which men commonly
referve for their own immediate confumption.

There ^re two different ways in which a capi-
tal may be employed fo as to yield a revenue or
profit tp its employer.

First, it may be employed; in raifing, manu-
fafturing, or purchafing goods, and felling them
again with a profit. The capital employed in
this manner yields no revenue or profit to its
employer, while it either remains in his pofleflion,
or continues in the. feme ftiape. , The goods of the

5 merchant

4»a THE NATURE AND CAUSES OF

BOOK merchant yield him no revenue or profit till he
fells them for money, and the money yields him
as little till it is again exchanged for goods. His
capital is continually going from him in one
(hape, and returning to him in another, and it is
only by means of fuch circulation, or fucceflive
exchanges, that it can yield him any profit.
Such capitals, therefore, may very properly be
called circulating capitals.

SEcoNDtY, it may be employed in the im-
provement of land, in the purchafc of ulcful
machines and inftruments of trade, or in fuch-
like things as yield a revenue or profit without
changing mailers, or circulating any further.
Such capitals, therefore, may very properly be
called fixed capitals.

Different occupations require very different
proportions between the fixed and circulating
capitals employed in them.

The capital of a merchant, for example, is al-
together a circulating capital, He has occafion
for no machines or infbruments of trade, unlels
his fhop, or warehoufe, be confidered as fuch;

Some part of the capital of every mailer arti-
ficer or manufafturer muil be fixed in the inflru-
rtients of his trade. This part, however, is very
fmall in fome, and very great in others. A
mailer taylor requires no other inftruments of
trade but a parcel of needles. Thofc of die
mailer ihoemaker are a little, though but a very
little, more expenfive. Thofe of the weaver riie
a good deal above thofe of the fhoemaken The
f^r greater part of the capital of all fuch maftep

. artificers^

THE WEALTH. OF NATIONS. 41^

,, Artificers, however, is circulated, either in the ^ " ^ p*
wages of their wprkmen, or in the price of their
materials/ and repaid with a profit by the price of
the work. '

In other works a much greater fixed qapital is
required. In a great iron- work, for example,
the furnace for melting the ore, the forge, the
flitt-mill, are inftruments of trade which cannot
be eredled without a very great expence. In
coal-works, and mines of every kind, the ma-
chinery neceffary both for drawing out the water
and for other purpofes, is frequently ftill more
cxpenfive.

That part of the capital of the farmer which
is employed in the inftruments of agriculture is
a fixed ; that ' which is employed in the wages
and maintenance of his labouring fervants, is a
circulating capital. He makes a profit of the
one by keeping it in his own poffeffion, and of
the other by parting with it. The price or value
of his labouring cattle is a fixed capital in the
fame manner as that of the inftruments of huf-
bandry: Their maintenance is a circulating ca-
pital in the fame manner as that of the labour-
ing fervants. The farmer makes his profit by
keeping the labouring cattle, and by parting
with their maintenance. Both the price and
the^ maintenance of the cattle which are bought
inland fattened, not for labour, but for fale, are
a circulating capital. The farmer makes his
profit by parting with them. A flock of fheep
or a herd of cattle that, in a breeding country,
is bought in, neither for labour, nor for fale,

but

414 THE NATURE AND CAUSES Of

BOOK but in order to make a profit by their wool, by
their milk, and by their increafe, is a fixed capital.
The profit is made by keeping them. Their main-
tenance is a circulating capital. The profit is made
by parting with it ; and it comes back with both
its own profit, and the profit upon the whole price
of the cattle, in die price of the wool, the milk,
and the increafe. The whole value of the leed
too is properly a fixed capital. Thoiigh it goes
backwards and forwards between the ground and
the granary, it never changes matters, and there-
fore does not properly circulate. The farmer makes
his profit, not by its fale, but by its increafe.

The general ftock of any country or fociety is
the fame with that of all its inhabitants or mem-
bers, and therefore naturally divides itfelf into
the fame three portions, each of which has a dif-
tinft funftion or office.

The Firft, is that portion which is referved
for immediate confumption, and of which the
charafteriftic is, that it affords no revenue or
profit. It confifts in the ftock of food, clothes,
houfehold furniture, &c. which have been pur-
chafed by their proper confumers, but which are
not yet entirely confumed. The whole ftock of
mere dwelling-houfes too fubfifting at any one
time in the country, make a part of this firft por-
tion. The ftock that is laid out in a houfe, if
it is to be the dwellingrhoufe of the proprietor,
ceafes from that moment to ferve in the funftion
of a capital, or to afford any revenue to its owner.
A dwelling- houfe, as fuch, contributes nothing
to the revenue of its inhabitant; and though it

is.

THE WEALTH OF NATIONS. . 415

is, no doubt, extremely ufeful to him, it is as his chap.
clothes and houfehold furniture are ufeful to him,
which, however, make a part of his expencc, and
not of his revenue. If it is to be let to a tenant
for rent, as the houfc rtfelf can produce nothing,
the tenant muft always pay the rent out of feme
other revenue which he derives either from la-
bour, or ftock, or land. Though a houfe, there-
fore, may yield a revenue to its proprietor, and
thereby ferve in the flinAion of a capital to
him, it canfxOt yield any to the public, nor
ferve in the funftion of a capital to it, and the
revenue of the whole body of the people can
never be in the fmalleft degree increafed by it.
Clothes, and houfehold furniture, in the fame
manner, fometimes yield a revenue, and thereby
ferve in the funftion of a capital to particular
perfons. In countries where mafquerades are
common, it is a trade to let out mafquerade
drefles for a night. Upholfterers frequently let
furniture by the month or by the year. Under-
takers let the furniture of funerals by the day
and by the week. Many people let furnifhed
.houfes, and get a rent, not only for the ufe of
the houfe, but for that of the furniture. The
revenue, however, which is derived from fuch
things, muft always be ultimately drawn from
fome other fource of revenue. Of all parts of
the ftock, either of an individual, or of a fociety,
referved for immediate confumption, what is
laid out in houfes is moft flowly confumed, A
ftock of clothes may laft feveral years: a ftock
of furniture half a century or a century : but a

ftock

4i6 THE NATURE AND CAUSES OF

B op K ftock of houfcs, well built and properly taken care
of, may laft many centuries. Though the period
of their total confumption, however, is more dif-
tant, -they are ftill as really a ftock reftrved for inn-
mediate confumption as either clothes or houfehold
furniture.

The Second of the three portions into which
the general ftock of the fociety divides itfelf, is the
fixed capital j of which the charafteriftic is, that it
affords a revenue or profit without circulating or
changing finafters. It confifts chiefly of the four
following articles :

First, of all ufeful machines and inftruments
of trade which facilitate and abridge labour:

Secondly, of all thofe profitable buDdings
which are the means of procuring a revenue, not
only to their proprietor who lets them for a rent,
but to the perfon who pofleffes them and pays that
rent for themi fuch as fliops, warehoufes, work-
houfcs, farmhoufes, with all their neceflary build-
ings j ftables, granaries, &c. Thefe are very
different from mere dwelling houfcs. They are a
fort of inftruments of trade, and may be confidcred
in the fame light >

Thirdly, of the improvements of land, of
what has been profitably laid out in clearing,
draining, ♦ enclofmg, manuring, and reducing it
into xhe condition moft proper for tillage and
culture. An improved farm may ^ery juftly be
regarded in the fame light as thofe ufeful ma-
chines which facilitate and abridge labour, and
by means of which, an equal circulating capital
can afford a much greater r^^noc to its cm^

ploycn

.A-

I'HE WEALTH OF NATIONS.^ 417

pldycr. An improved farm is f(^uall)r ad van- chap,
tageous and more durable than any of thofe ma*
chines, frcquendy requiring no odier repairs dian
the mod profitable application of the farmer's
capital employed in cultivating it :

Fourthly, of the acquired and ufeful abilities^
of all the inhabitants or members of the fociety.
The acquifition of fuch talents, by the main-
tenance of the acquirer during his education,
ftudy, or apprenticefhip, always cofts a real ex-
pence, which is a capital fixed and realized, as
it were, in his perfon. Thole talents, as they
make a part of his fortune, fo do they likewife of
that of the fociety to which he belongs. The
improved dexterity of a workman may be con.
lidered in the fame light as a. machine or inilru-
ment of trade which facilitates and abridges la-
bour, and which, though it coils a certain ex-
pence, repays that expence with a profit.

The third and lafl: of the three portions into
which the general ftock of the fociety naturally
divides itfelf, is the circulating capital ; of which
the charafteriftic is, that it affords a revenue only
by circulating or changing mafters. It is com-
posed likewife of four parts :

First, of the money by means of which all
the other three are circulated and difhibuted to
their proper confumers :

Secondly,^ of the ftock of provifions whicl^
are in the po0^flion of the butcher, the grazier,
the farmer, the corn-merchant, the brewer, &c.
and from the fale of whicH they expeft to derive a
profit:

Vol. L E c Thirplv,

Book
II.

4tlt THE- NATtlRl AND CAtlSSS OP

Thirdly, of the matdialsy whether altogether
rude, or rtiore or Icls manufafbured, of clothes,
furniture and building, which are not yet made
up into aiiy of thofe three Ihapes, but which
remain in the hands of the growers, the manu-
facturers, the/ mercers, and drapers^ the timber-
nrierchants, the carpenters and joiners, the brick-
makers, &c.

Fourthly, and Baftly, of the work which h
made up and completed, but which is ftill in
the hands of the merchant or manufadhirer, and
not yet difpofed of or diftributed to the proper
confomcrs; fuch as the finiihed work which we
freqliently find ready-made in the fhops of the
fmith, the cabinet-maker, the goldfmith, the
jeweller, the china-merchant, &c. The circu-
lating capital confifts in this manner, of the
pravifions, materials, and finiftied work of all
kinds that are in the hands of their refpeftive
dealers, and of the money that k neceflary for
circulating and diftributing them to thofe who
are finally to ufe, or to confume them.

Of thcfe four parts three, provUions, materials,
and finilhed work, axe, cither' annudlly, or in a
longer or fhorter period, regularly withdrawn
from it, aiid- |^ced either in the fixed Capital
or m the ftoek referved foa* immediate cotifiimp*
tion.

:' Ev^RY BxeA capital* is both originaBy derived
from, and requires to be continually Aipported
by a circulating capital. AU ufefol machines
and inftrumeots of trade are originally derived
from a circulating capital, which furniflics die

maijerials.

THfe WEALTH OF NATIONS* 41$)

toatcnab of which they are made, and die mm- ^ ^ ^ p.:
tenance of the workmen who make them* They
require too d capital of the f^me kind to kc^p
them in conftant repair. r ' I

No fixed capital can yidd any rgv^nle.ki^j: Jbf
means of a circulating capital. The .fxvoft uleful
machines and inftrumeais of trade will produce
nothing without the circulating capital which af-
fords the materials they, are employed upQn, and
the maintenance of the workmen rWho cmf^oy
them. Land, however kjiprovedt, wiU , yield no
revenue without/ a circulating capital, which
maintains the labourers who cultivate wd collect
its produce.

To maintain and augment the ftock which
may be referved for immediate confymption, is
the fole end and purpofe both of the fixed and
circulating capitals. It is this ftock wh^ch
feeds, clothes, and lodges tjie people. Their
riches or poverty depends upon the abundant or
fparing fypplies which thofe two capitals can af-
ford to the ftock referved for immediate con-
fumption.

; So great a part of the circulating capital be-
ing continually withdrawn from it, in order to
be placed in the other two branches of .the ge-
neral ftock. of the focietyj it muft in its turn
require continual fupplies, without which it
would foon ce^ to «Hift. Thefe fupplies are
principally drawn from three fourcjes, the pro-
duce of land, of mines, and of fifberics, Thefe
gfibrd continual fupplies of provifions and ma-
terials, of which part is afterwards wrought up

Ee 2 into

420 Ti{& NATORB AKD CAUSES OF

• ^^j^ ^ irtto finiftied work, and by which arc replaced
die provifions, materials^ and finiflied work con-
tinually withdnM^n from die circulating ci^ital.
From mines too is drawn what is necef&ry for
nwritaining and augnntentiqg that part of it which
cronfifts ifn m<>ney. For though, in the ordinary
courfe of bifiitefs^ this part is not, like the other
threei neceflarily withdrawn from it, in order
to be piaced in the other two branches of the
general ftock o( the fociety, it muft, however,
like all other things, be walled and worn out
at * laft, and fometimes too be either loft or
ient abroad, and muft, therefore, require am-
tinual, though, no doubt, much fmaller fup-
plies.

Land, mines, and filheries, require all both a
fixed and a circulating capital to cultivate them :
and their produce rteplaces with a profit, not
only thofe capitals, but all the others in the
fociety. Thus the farmer annually replaces to
the manufadurer the provifions which he had
confumed and the materials which he had wrought
up the year before j and the manufacturer re-
places to the farmer the finilhed work which
he had wafted and worn out in the fame time.
This is the real exchange that is annually made
between thofe two orders of people, tiiough it
feldom happens that the rude produce of the one
and the rhanufa£lured produce of the othei;, are
direflly bartered for one another ; becaufe it
feldom happens that the farmer fells his corn
and his cattle, his flax and his wool, to the very
fame perfon of whom be chufes to purchafe the

clothes^

THE WEALTH OP NATIONS. 4?l

clo^^, furniture, and inftruments of trade wbdchc h a p^
he wants. He fe]l^, therefore, his nidQ produjce
for money, with which he. can' ptjirchafe, where-
ever it is to be had, the nian.ufa(%yred produce
he has occafion for. Land even repla^es^ ji^-p^
at leaft, the capitals with which - filheries \an4
mines are cultivated^ It is the produce of laad
which draws the fi(h from the waters ; and it ii
the produce of die furface of. the eardi which exr
tradb the minerals from its bowels.

The produce pf landj minims, and f^h^rie^,
when their natural fertility is equal, is in propor-
tion to the extent and proper application of the
capitals employed about them. When the capi-
tals are equal and equally well applied, it is in
proportion to their natural fertility.

In all countries where there is tolerable fecu*
rity, every man of common underftanding wiU
endeavour to employ whatever ijbock he can com-
mand^ in procuring either prefept enjoyment of
future profit. If it is employed in proK^urJag
prefent enjoyment, it is a ftqck rcferyed for im-
mediate confumption. If it is eniployed iq pro*
curing future profit, it muft procuiip this profit
either by flaying with hiip, or by going from
him. In the one cafe '\% ijs ^ fixed, in the other
it i)s a circulating capital, t A man muft be perr
fcftly crazy who, where fhere i$ tolerable fecijr
rity, does not employ all the ftpck which he
eomnjiands, whether it be his own or borrowed
of other people, in fome one or other of thofc
tl)ree ways.

E?3 In

42t THE NATURE AND CAUSES OF

In th(^e uafortanate countries, indeed, where
men are continuatty afraid of the vicdence of
their fuperiors, they frcqtientfy bury atid conceal
a great part of their flock, in order to have it
alwaysv ^ hand to carry with them to fomc place
of fafety, in cafe of their being threatened with
any of thofc difafters to which they confider diem-
^Ives as at all times expofed. This is faid to be
Z common pradice in Turkey, in Indoftan, and,
I believe, in moft other governments of Alia. It
feems to have been a common praftice among
our anceftors during the violence of the feudal
government. Trcafure-trove was 4n thofe times
confidered as no contemptible part of die revenue
of the greatefl fbvereigns in Europe, Jt coniifted
in fuch treafure as was found concealed in the
earth, and to which no particular perfon could
prove any right. This was regarded in thofe times
as fo important an pbjeft, that it was always con-
fidered as belonging to the fovereign, and nei-
ther to the finder nor to the proprietor of the
land, unlefs the right to it had been conveyed to
the latter by an exprefs claufe in his charter. It
>yas put upon the fame footing with gold and
filver mines, which, without a fpecial claufe in
the charter, were never fuppofed to be compre-
hended in the general grant of the lands, though
mines of lead, copper, tin, and coal were, as
things of fmaller qonfequence.

CHAP.

THE WEALTH OF NATIONS. 4^j

C H A P, IL

Of Money conjidered as a particular Branch of the
general Stock of the Society^ or of the Exfence
of maintaining the National CapitaL

T has been fhewn in the firft Book, that the chap.

11*
price of the greater part of c6mmodities re-

folves itfelf into three parts, of which one pays
the wages of the labour, another the profits of
the ftock, and a third the rent of the Jand which
had been employed in producing and bringing
(hem to market: that there are, indeed, fome
commodities of which the price is made up of
two of thofe parts only, the wages of labour, and
the profits of ftock: and a very few in which it
confifts altogether in one, the wages of labour;
but that the price of every commodity neceflarily
refolves itfelf into fome one, or other, or all of
thcfe three parts; every part of it which goes
neither to rent nor to wages, being neceflarily
profit to fomebody.

Since this is the cafe, it has been obferved,
with regard to every particular commodity,
taken leparately; it muft be fo with regard to
all the commodities which compofe the whole
annual produce of the land and labour of every
country, taken complexly. The whole price or
exchangeable value of that annual produce, muft
rcfolve itfelf into the fame three partsy and be
parcelled out among the different inhabitants of

£C4 thQ

424 "THE NATURE AND CAUSES OF

B o o R the country^ either as the wages of their labour,
'^' the profits of their ftock^ or the rent of their
land*

BvT though the whok value of the annual
produce of the land aiid Ubour of every country
is thus divided among and conftitutes a revenue
to its different inbd^itants ; yet as in the rent of a
private eftate we difUnguilh between the grois
rent and the neat rent, fo may we likewiie in
^e revenue of all the inhabitants of a gj^t$t
country.

Th£ grols rent of a private eftate compre-*
henda whatever is paid by the farmer > the neat
rent) what remains free to the landlord, alter de-
ducing the expence of management, of rqpairs^
and all other neceiTary charges > or what, with*
out hurdng his eftate, he can affbrd to place in
his ftock referved for immediate confumption, or
to ipend upon his table, equipage, the. orna-
ments of his houfe and furniture, his private en-
joyments and an^ufements. Hi$ real wealth is
in proportion, not to his grofs, but to his neat
rent.

The grofs revenue of all the inhabitants of a
great country, comprehends the whole annual
produce of their land and labour ; the neat re-
venue, what remains free to them after deducting
the expence of maintaining; firft, their fixed;
and, fecondly, their ciixulating capital; or what,
without encroaching upon their capital, they can
place in their ftock referved for immediate con-
fumption, or fpcnd upon their fubfiftence, con-
Vgnjencies, and amufements. Th^ir r^al wealth

THE WEALTH OF NATIONS. 425

too is in proportion^ not to their grois^ but to c h a p,
their neat revenue.

The whole expence of maintaining the fixed
capital^ tnuft evidendy be excluded from the
neat revenue of the Ibciety; Neither the mate-
rials neceflary for fupporting theJr ufeful ma-
chines and inftruments of trade, their profitable
buildings, &c. nor the produce of the labour ne-
ceffary for fafliioning thofe materials into the
proper forfti, can ever make any part of it. The
price of that laboijr may indeed make a part of it;
as the workmen (6 employed 'may place the whole
value of their wages in their ftock referved for
immediate confumption. But in other forts df
labour, both the price and the produce go t6
this ftock, the price to that of the workmen, the
produce to that of other people, whofe fubfiftence,
(Tonveniencies, and amufements, are augmented by
the labour of thofe workmen.

The intention of the fixed capital is to in-
creafe the produftlve powers of labour, or to
enable the fame number of labourers to perform
a much greater quantity of work. In a farm
where all the neceflary buildings, fences, drains,
<rommunications, &c, are in the moft perfeft
good order, the fame number of labourers and
labouring catde will raife a much greater pro-
duce> than in one of equal extent and equally
good ground, but not furniflied with equal con-
veniencies. In manufaftures the fame number
of hands, ^ affifted with the beft machinery, will
work up a much greater quantity of goods than
with more imperfed inftruments of trade. The

expence

4*6 THfi NATURE AND CAUSES OF

BOOK expepce which is properly laid out upon a fixed
capital of any kindj is always repaid with great
profit^ and increafes the annual produce by a
much greater value than that of the fuppoit
which fuch improvenients require. This fup-
port, however, ftill requires a certain portion of
that produce. A certain quantity of materials,
and the labour of a certain number of workmen,
both of which might have been immediately
employed to augment the food, clothing and
lodging, the fubfiftence and conveniencies of the
fociety, are thus diverted to another emplloy-
mcnt, highly advantageous indeed, but ftill dif-
ferent from this one. It is upon this account
that all fuch improvements in mechanics, as
enable the fame number of workmen to perform
an equal quantity of work with cheaper and
fimpler machinery than had been ufual before,
are always regarded as advantageous to every
fociety. A certain quantity of materials, and
the labour of a certain number of workmen,
which had before been employed in fupporting
a more complex and expenfive machinery, can
afterwards be applied to augment the quantity
of work which that or any other machinery is
ufeful only for performing. The undertaker of
fome great manufaftory who employs a thouiand
a-year in the maintenance of his machinery, if he
can reduce this expence to five hundred, will na-
turally employ the other five hundred in pur-*
chafing an additional quantity of materials to bo
wrought up by an additional number of work-
men. The quantity of that work, therefore,

which

THE WEALTH OF NATIONS. 4*7

which his machinery was ufefvil only for per- <5 H a ^.
forming, will naturally be aiignnented, and with
it all the advantage and convenicncy which the
fociety can derive from that work.

The expence of maintaining the fixed capital in a
great country, may very properly be compared to
that of repairs in a private eftate. The expence
of repairs may frequently be neceflary for fupport-
ing the produce of the eftate, and confequently both
the grofs and the neat rent of the landlord. When
by a more proper \dire6lion, however, it can be
diminiftied without occafioning any diminution of
produce, the grofs rent remains at leaft the fame as
before, and the neat rent is neceffarily augmented.

But though the whole expence of maintaining
the fixed capital is thus neceffarily excluded from
the neat revenue of the fociety, it is not the fame cafe
with that of maintaining the circulating capital. Of
the four parts of which this latter capital is com-
pofed, money, provifions, materials, and finilhed
work, the three laft, it has already been obferved,
are regularly withdrawn from it, and placed either
in the fixed capital of the fociety, or in their ftock
referved for immediate confumption. Whatever
portion of thofe confumable goods is not employed
in maintaining the former, goes all to the latter,
and makes a part of the neat revenue of the fo-
ciety. The maintenance of thofe three parts of
the , circulating capital, therefore, withdraws no
portion of the annual produce from the neat re-
venue of the fociety ;j befides what is neceffary for
maintaining the fixed capital.

4 The

II«

4»8 THE NATURE AND CAUSES OF

1 o o K The circulating capital of a fbciety is in th}$
rdpe£fc different from that of an individual.
That of an individual is totally excluded from
making any part of his neat revenue^ which muft
confift altogether in his profits. But though the
circulating capital of every individual makes a
part of that of the fociety to which he belongs,
it is not upon that account totally excluded from
making a part Ukewife of their neat revenue.
Though the whole goods in a merchant's fhop
mufl: by no means be placed in his own fk>ck
ceferved for immediate confumption, they may
in that of other people, who, from a revenue de-
rived from other funds, may regularly replace
their value to him, together with its profits,
without occafioning any diminution either of his
capital or of theirs.

Money, therefore, is the only part of the cir-
culating capital of a fociety, of which the main-
tenance can occafion any diminution in th^r neat
revenue.

Thp fixed capital, and that part of the circu-
lating capital which confifts in money, fo far as
they affeft the revenue of the fociety, bear a very
great refemblance to one another.

First, as thofc machines and inftrumcnts of
trade, &c. require a certain expence, firft to eredt
them, and afterwards to fupport them, both
which expenccs, though they make a part of the
grofs, are deduftions fi-om the neat revenue of
the fociety i fo the ftock of money which circii-
lates in any country muft require a certain ex-
pence, firft to colled it, and afterwards to fup-
port

THE WEALTH O^ NATIONS. 4,9

port it, both which expenccs, though they make c h a ^.
a part of the grois, are, in the fame manner, dt-
dudions frcMn the neat revenue of the fociety.
A certain quantity of very valuable materials,
gold and filver, and of very curious labour, in-
ftead of augmenting the ftotk referved for im-
mediate confumption, the fubfiftence, conveni-
encies, and amufements of individuals, is em-
ployed in fupporting that great but expenfive
inftrument of commerce, by means of which
€very individual in the fociety has his fubfift-
ence, conveniencies, and amufements, regularly
difiributed to him in their proper proportion.

Sjbcomdly, as the machines and inftruments
of trade, &c. which compofe the fixed capital
either of an individual or of a fociety, make no
part either of the grofs or of the neat revenue of
either; fo money, by 'means of which the whole
revenue of the fociety is regularly diffa-ibuted
amoi^ all its different members, makes itfelf no
part of that revenue. The great wheel of cir-
culation is altc^ether diflferent from the goods
which are circulated by means of it. The re-
venue of the fociety confifb altogether in thofe
goods, and not in the wheel which circulates
them. In computing either the grofs or the
neat revenue of any fociety, we muft always,
from their whole annual circulation of, money
and goods, deduA the whole value of the money,
of which not a fingle &rthing can ever make any
pait of either.

It is the ambiguity of language only which
can make this propofition appear either doubtful

43tf TtlE NATtlRS AND CAt/SES OF'

B o o K Or paradoxicaL When properly explained and
underftoodj it is almoft fclf-cvidcnt.

When we talk of any particular fum of nnoney,
we fometimes mean nothing but the metal pieces of
which it is compofed ; and Ibmetimes we indiide
in our meaning fome obfcure reference to the goods
which can \>c had in exchange for it> or to the power
of purchafing which the po&Ifion of it conveys.
Thus when we fay, that the circulatbg money of
England has i3een computed at eighteen millions^
we mean only to exprefs thq amount of the metal
pieces, which fome writers have computed> or
rather, have fuppofed to circulate in that country.
But when we fay. that, a man is worth fifty or a hun-
dred pounds atyqar, we mean commonly to exprefs
not only the amount of t;he metal pieces which are
annually paid to him,^ but the value of the goods
which he can annually purchafe or confume.. We
mean commonly to afcertain what is or ou^it to
be his way of living, or the quantity and quaUty of
the necefiaries and conveniencies of life in which
he can with propriety indulge himfel£

When, by any particular fum of money, wt
mean not only to -exprefs the amount of the
metal pieces of which it is compofed, but to in-
clude in its fignification fome <^fcure reference
to the goods which can be had in exchange for
them, the wealth or re^nenue - which it in this cafe
denotes, is equal only to one of the two values
which are dius intimated" fomewhat . ambiguoufly
by the fame word, and to the latter more pro*
perly than to the former, tx> the money's wortk
taore properly than to the nx>ncy«^

Thus

THE WEALTH OP NATI6NS. 451

TH^us if ^ guinea be the weekly pcnfion of a c h a p.
particular perfon, he can in the courfe of the ^''
week purchafe with ' it a certain quantity of fub-
liibence, conveiiiencies, and amufements. In
proportion as this quantity is great or fmall, fo
are his real riches, his real, weekly revenue. Hia
weekly revenue is certainly not equal both to
the guinea, and to what can be purchafed with
it, but only to one or other of thofe two equal
values } and to the latter more properly than to
the former, to the guinea's worth rather than to
the guinea.

If the penfion of fuch a perfon was paid to
him, not in gold, but in a weekly bill for a
guinea, his revenue (urely would not fo properly
coniift in the piece of paper, as in what he could
get for it. A guinea may be confidered as a bill
for a certain quantity of neceflaries and conve-
niencies upon all the tradefmen in the neigh-
bourhood. The revenue of the perfon to whom
h is paid, does not fo properly confift in the
piece of gold, as in what he can get for k, or in
what he can excha^ige it for. If it could be ex-
changed for nodiing, it would, like a bill upon a
bankrupt, be (^ no more value than the moft
ufclefs piece of paper.

Though the weekly or yearly revenue of all
the different inhabitants of any country, in the
feme manner, may be, and in reality frequently
is paid to them in money, their real riches, how-
ever, the real weekly or yearly revenue of all of
them taken together, muft always be great or
fixudl in proportion to the quantity of con«

fumablc

43t ' THE NATURE AND CAUSES OF

BOOK fumabld goods which they caii all of them ptir-
"' chafe with this money. The whole revenue of
all of them taken together is evidently not equal
to both the money and the confumable goods ; but
only to one or other of thofe two values^ and to
the latter more properly than to the former.

Though we frequently, therefore, expreis a
perfon's revenue by die metal pieces- which arc
annually paid to him, it is becaufe the amount
of thofe pieces regulates the extent of his power
of purchafing, or the value of the goods which
he can annually afford to confume. We ftill conlider
his revenue as confiding in this power of purchafing
or confuming, and not in the pieces which convey it.

But if this is fufficiently evident even with
regard to an individual, it is ftill more fo' with
regard to a fociety. The amount of the metal
pieces which are annually paid to an individual,
is often precifely equal to his revenue, and is
upon that account the fliorteft and beft expref-
fion of its value. But the amount of the metal
pieces which circulate in a fociety, can never be
equal to the revenue of all its members. As the
fame guinea which pays the weekly penfion of
one man to-day, may pay that of another to-
morrow, and that of a third the day thereafter,
the amount of the metal pieces which annually
circulate in any country, muft always be of
much Icfs value than the whole money penfions
annually paid with them. But the power of
purchafing, or the goods which can Yucceflively
be bought with the whole of thofe money pen-
fions as they are fuccefiively paid, muft always

.' f

bfe precifely of the fame value with thofe J)eft- c W a i>.
fions.j as miift likewife be the revenue of the
different perfon3 to whbm they ard paid. That
revenue, therefore, tannot corififl: in thdfe metal
pieces, of which the amount is {o mtich inferior
tb its value, but iri th6 power of purchafing, in
the goods whieh cah fucceflively be bought with
them as they circulate from hand to hand.

Money, thereforCi the .great wheel of cirtuk*
tion, ^he great inftrumeht of commerce, like all
other inflmments of trade, though it makes a
part and a very valuable part of tjle capital^
makes no part of the rfcvenue of the fbciety to
which it belongs; and though the metal pieces
of which it is compofed, in the courfe of their
annual circulation, diftribute to every man the
revenue which properly belongs to him, they
make themfelves no part of that revenue^

Thirdly, and laftly, the machines and inftrU^
ments of trade, &c. which compofe the fixed
capital, bear this further refemblance to that
part of the circulating capital which confifts in
money; that as every faving in the expence of
erefting and fupporting thofe machines, which
does not diminifh the produftive powers of la^
bour, is an improvement of the neat revenue of
the fbciety; fo every faving in the expence of
coUefting and fupporting that part of the circula-
ting capital which confifts in njoney, is an im-
provement of exactly the fame kind.

It is fulficiently obvious, and it has partly too
been explained already, in what manner every
laving in the expence of fupporting the fixed

Vol. I. F f " capital

4^4 "THB NAi;VRB ANDi CAy6£.S QF

BOOK capital is afi improvcmeat of thp x^c^ r^v^tie
of the fociety. The^ whol^ capii;al of thp; under-
taker of QV^ry work i^ negeferijjr. 4wdfi4: bf^r
tween hi& fixedf ^d. hi^ circylfU^ing; capic^^
While his >vhol9 capital rem^i^s t)ip. f^WHe,. ^e
fmaller the one part^ the gpeam mgft, Q^^^fliM'^ir.
be the oth^r. It is the circMl^ijg capii^: wfeifih:
furnilhes the materials ^i>d: w^es, of l{^tH>U& ^ftd:
f]}t^. induftry. into ipqtion. Evei|y fewng,; ^ffle-
fore^ in the expence qf m^ntajnipg tjie. fi^^l Gi*r
pitaJ, wjiich does not diipiiplh; th^ piiQdu<9bi]ijr€t
powers of labour^ muIL inqreafe t^ funci. which^.
pups induftry into ipodon, and confftqu^ntly th^t
apnvial prodqce of lan4 and. labour,, tfee tfia^jtr
v^ue of every fociety. ,

The fubftitutiqa of gaperin^tfeeTOpin bffgjHck
and filver money, replaces ^ vc^ry expiqpfivjie: in-
ftrument of cpmrnerce >^ith onerixiu^h.l^. cqftiys,.
and. fometimes equally cojivcnienti Cir<;u}fit|on
comes to be; carried qnby a.ney wh^el, ^ic^itc
cqfts Icfs both to er^6t and to.maint^in^th^a.tbe
old one. But in \yhat mann^f thi$: operat^^ni h
perform^dj and in' what macm^ ife tt»^ t^^ in*-
cfeafe ei^h^r the grofs or the neat:.rpvjenye:of the.-
fociety, is not altogether fq obyious, . apdi mny
therefore require foqiie further ej^plieafiqn.

There are feveral different: fprts of; p^per.
moneys but the circulating notes . of- banks aod^
hankers are the (pedes which is beft knowDj and
which feems beft adapted for this purpofc«»
.When the people of any, particular c^^untry
have fuch confidence' in the fortune, probity,
and prudence of a particular, baok^ci. a&. t^ bct-

lieve

THE WEALTH OF NATIONS. 435

iitve that he is silw^ys feidy m |)ay upon de- c h a p.
mand fuch of his promiflfory notes as are likely
to be at any time prefented to him ; thofe noteiJ
come to haye the fame currency as gold and
filver money, from the confidence chat fuch rfto-^
flitfy cart at any time be had for them.

A PARTICULAR, banker fends among his cpf-
tomers his owrt promiflbry notes, to the extent, we
ftall fupjx)fe, of a hurtdred thoufand pounds.
As thofe note^ fei*ve ail the purpofe^ of money, ,
his debtors pay him tKe fame? intereft as if he had
fcnt them fi> much money. This intereft is the
fburce of his^ gain. Though fome of thofe notes
are continually coming .back upon him for pay-
ffteftt, part of thenri c^mtinue to circulate for
mottths^ and years together*. Though he has ge-
nerally' ih circulatiort, therefore, notes to the
e*tenft of " a hundred fhoufand pounds, twenty
thoufand pounds in gold and filvei' may, fre-
qWeritly, be a fufficient provifion for anfwering
occafiorial demands. By this operation, there-
fore, twenty thoufand pounds in gold and filver
perform all the ftin<5tions which a hundred thou-
hnd could othen^fe have performed. The fame
exchanges may be m^de, the fame quantity of
conlumable goods may be ch-culated and diftri-
buted to their proper confumcrs, by means of his
promiflbry notes, to the value of a hundred
thoufand pounds, as by an equal value of gold
and filver money. Eighty thoufand pounds of
gold and filver, therefore, can, in this manner,
be fpared fi*om the circulation of the country ;
and if different operations of the feme kind

F f 2 Ihould,

4^6 THE NATURE AND CAtJSES OP

BOOK fhbuld, at the famcj time, be carried on by rmnf
diflFerent banks and bankers^ the whole circular
tion niay thus be conduced with a fifth part only
of the gold and filvcr which would otherwife have
been requifite.

Let us fuppole^ for example, that the whole
tirculatmg money o[ fome particular country
amounted, at a particular time, to one million
fterling, that fum being then fufEcient for cir-
culating the whole annual produce of their land
and labour. Let us fuppofc too, that fome
time thereafter, different banks and bankers
iflued promiflbry notes, payable to the bearer,
to the extent of one million, referving in their
different coffers two hundred thoufand pounds
for anfwering occafional demands. There would
remain, therefore, in circulation, eight hun-
dred thoufand pounds in gold and filver, and
a million of bank notes, or eighteen hundred
thoufand pounds of paper and money together.
But the annual produce of the land and labour
of the country had before required only one
million to circulate and diftribute it to its pro-
per confumers, and that annual produce cannot
be immediately augmented by thofe o{)erations
of banking. One million, therefore, will be
fufEcient to circulate it after them. The gpods
to be bought and Ibid being precifely the fame
^ before, the fame quantity of money will be
fufEcient for buying and felling them. The
channel of circulation, if I may be allowed fuch
an exprefUon, will remain precifely the fame as
^ before. One million we have fuppofed fufficient

THE WEALTH OP NATIONS. 43^

to fill that channel. Whatever, therefore, is
poured into it beyond this fum, cannot run in it,
but muft overflow. One million eight hundred
thoufand pounds are poured into it. Eight hun-
dred thoufand pounds, therefore, muft over-
flow, that fum being over and above what can
be employed in the circulation of the country.
But though this lum cannot be employed at home,
it is too valuable to be allowed to lie idle.
It will, therefore, be lent abroad,, in order to
feek that profitable employment which it cannot
find at home. But the paper cannot go abroad ;
becaufe at a diftance from the banks which ifliie
it, and from the country in which payment of it
can be exafted by law, it will not be received
in common payments. Gold and filver, there-
fore, to the amount of eight hundred thoufand
pounds will be fent abroad, and the channel of
home circulation will remain filled with a million
of paper, inftead of the million of thofe metals
which filled it before.

But though fo great a quantity of gold and
filver is thus lent abroad, we muft not imagine
that it is lent abroad for nothing, or that its
proprietors make a prefent of it to foreign na-
tions. They will exchange it for foreign goods
of libme kind or another, in order to fupply the
confumption cither of fome other foreign country,
or of their own.

If they employ it in purchafing goods in one
foreign country in order to fupply the confump^
tion of another, or in what is called the carrying
tfade^ whatever profit they make will be an ^-

F f 3 dition

43^ THE NATURE AND CAUSES OF

BOOK dition to the neat revenue of their owo country.
It is lik^ a new fund, created for carrying on a
new trade i dorpeftic bufinefs being now tranf*
afted by paper, and the gold md filver hc'mg
converted into a fund for-this new trade.

If they employ it in purch^fing. foreign goods
for . hoa^e confumption, they m^y cither, firft,,
purf h^fe f\ich goods ^s are likely to be confun[)e4
by idle people who produce nothing, fuch as fo-
reign win?s, foreign filks, &:c. j or, fecondly»
they may purchaie at) additional ftock. of nia(e«
rials, tools, and provifions^ in order to inaUitain
^nd employ an additional number of induflxiou^
people, who re -produce, with a prpfit, the valu^
of their annual confumption.

So fa,r as it is employed in the firft way, it pro-
|note$ prodigality, increafcs expence and con-
fumption without inCFcaGng produdion, or e(ta«
blilhing any permanent fund k^ fupporting that
expence, and is in every refpe£t hurtful to the
fociety.

So far a3 it is employed in the fecond way, it
promotes induftry; and though it increaies the
confumption of the. fociety, it provi<ies a perma-
nent fund for fupporting that confumption, the
people who cpnfqme re-producing, with a profit^
the whole value of their annual confumf^tjon^
The grofs revenue of the ibciety, the annual
produce of their land and labour, is kicreafcd by
the whole value which the labcMar of thofe work-
men adds to the materials \^on whkh they arQ
employed J and their neat revenue by wh^ re-
mains of this vahie, after jdieduiting wh^t U ne-

ceffary

TfiE WBALttt OF >;rAtiONS. 439

cef&i7 for fopporring the tokrfs arid Jnftnarfi'ents of c h a p.
their tr^e. ' . "'

T*iAt the greii'ter part of the gold and filvet*
which, being forced abtbad by thofe operations
of binkingi h enfipteydd in piirchafing foreigA
goodis for hbnae eonfufnption, is aiid muft be em-
ployed ih pisrdiafing thofe of this fecond kind,
feems H6t only probable^ but almdft unavoidable.
Thoiigk fennfe pMicular men may fometirti'es
iftc^eafe their expefhce very cohliderably though
their revenue does nbt irtcrtafe at all, wte may be
iffured that no daft or order of men ever does
fo; bec^ufe, thoiigh tlie p-inciples of cortimoh
J^rudence do not always govern the conduft of
every individual, they always influence that of
the ttlajbrity of fcvery clafe br order. But the
Jievehlie of idle pfeople, cbhfideted as a clafs oi-
order, cannot, in the fmalleft degree, be in-
trcafed by diofe operations of banking. Their
expehce ih general, therefore^ cahnot be much
increafed by them^ though that of a few indi-
viduals isimong thetn may, and in reality Ibme-
tiltles is. The deitiahd of idle people^ therefore,
fbt fot-eign gdods, being the famci or very nearly
the fariiCj Ak before, a veiy fmall part of thfe
ihbnUyy ilehich being forced abroad by thofe ope-
ratidhs of banking, is employed ih purchafing
foreign goods for home confumptioh, is likely
to bfe ertif>loyfed in purchafing thofe for their ufe.
The gltater p^rt of it Will naturally be deltined
for the chiplbytheht of iriduftryi and nbt for the
maintenance of idlcnefs.

Ff4 When'

44Q THE NATURE AND CAUSES OF

• OOK When wc compute the quantity of induftry
'^ which the circulating capital of any focicty can
employ^ we muft always have regard tq thofe
parts of it only, which confift in provifions,
piatcrials, and fuiifhcd work; the Other, which
confifts in nipn^y, and which ferves only to cir-
culate thofc three, niuft: always be dedudted,
III order to put induftry into motion^^ three
things are requij(iteii materials to worl^ uponjt
tools to work with, and the wages or rccom-r
pence for the fake of which the work is done.
j^Ioney is neither a material to wprk upon, nor
a tool to work widij and though the wages* of
i^c workman are commonly paid to him ii^
money, his re^l revenue, like that of all other
men, confifts, not. in t;he money^ but in the
money's wqrth j not in the pietal piec;es, but in
what can be got for them,

,The quantity of induftry which any qapita|
can employ, muft, evidently, be equal to th^
piimber of wQrkmen whom it can fypply with
materials, tools, ^nd a maintenance fyitable to
the nature of the worl^, Mon^y nfiay be requi-
fite for purchafing the mater\^s and tools of the
work, as wejl as the maintenance of the worki-
men. But the quantity of induftry which th^
whole capital can employ^^ is certainly not; equ^
both to the mpncy which pjurchafes, apd to the
materials, tools, and maintenance, which are
purchafed w^th itj but .only to one or other of
thofe two values, and to the latter more properly
than to the former.

THE WEALTH OF NATIONS. ^ 44i

When paper is fubftituted in ;the room of gold c hap.
and filyer money, the quantity of the materials/
tools, and' maintenance, which the whole circu-
lating capital can fupply, may be increafed by
the whole value of gold and filver which ufed to
be employed in purchafing them. The whole
value of the great wheel of circulation and , dil-
tribution, is added to the goods which are circu-
lated and diftributed by means of it. The ope-
ration, in fome meafure, refembles that of the
. undertaker of fome great work, who, in confe-
quence of fome improvement in mechanics, takes
down his old ma<:hinery, and adds the difference
between its price and that of the new to his cir-
culating capital, to the fund from which he fur-
nifh^s materials and wages to his workmen.

What is the proportion which the circulating
money of any country bears to the whole value of
the annual produce circulated by means of it, it
. is, perhaps, impoffible to determine. It has
been computed by different authors at a fifth, at
a tenth, at a twentieth, and at a thirtieth part of
that value, But how fmall foever the proportion
which the circulating money may bear to the
whqle value of the annual produce, as but a part,
and frequently but a fmall part, of that produce, is
ever deftined for the maintenance of indiiftry, it
muft always bear a very confiderable proportion
to that part. When, therefore, by the fubftitu-
tion of paper, the gold and filver neceflary for
circulation is reduced to, perhaps, a fifth part of
the former quantity, if the value of only the
greq^ter part of the other foxir-ii^$ be added tci
. . . th(;

442 THE NATURE AND CAUSES OF

9 o o jc the funds which are deftined for the mainlsenati^
of iixJuftry, ic muft make a very coni&lerabte ad-
dition to the quantity of that induftry, tad, con-
fcqucntly, to the value of the annual produce of
land and labour.

An operation of this kind has, within thefc
five-and-twenty or thirty years, been perfotttted
in Scotland, by the erection di new bsuiking
companies in aimoft every confiderabk toWh> aftd
even in fome country villages. The effe6b df it
have been prccifely thofe above defcfibed. The
bufinefs of the country is almofl: entirely Carried
on by means of the paper of thofe difterettt bank-
ing companies, with which purchafes and pay^
ments of all kinds are commonly made. Silvtr
very feldom appears except in the change of a
twenty fhillings bank note, and goki ftill fel-
domer. But though the conduft of all thofe
different companies has not been unexception-
able, and has accordingly required an ad: of
parliament to regulate it; the contrary, notwith-
ftanding, has evidently derived great benefit frdn^
their trade. I have heard it afllertedj that tha
trade of the city of Glafgow doubled in about
fifteen years after the firft ereftion of the bank^
there \ . and that the trade of Scotkftd hd^ voibxt
than quadrupled fince the firft efeftion of the
two public banks at Edinburghj of whith the
one, called The Bank of Seotland^ was cfta*
Wifhed by a6l of parliament irt 16955 the other,
called The Royal Bank, by royal Charter in
1727. Whether the trade, etcher of Sd0tkhd iit
general, or of the city of Gla%OW ifl particulars
5 has

THE WEALTH OF NATIONS. 44^

has rcajly increafed in fo great a proportion, chap,
during (o fliort a period, I do not pretend to
know. If either of thena has increafcd in thia
proportion, it feems to be an^ efFeft too great to
be accounted for by the fole operation of this
caufe. That the trade and induftry of Scotland,
however, have increafcd very confiderably during
'this period, and that the banks have contributed a>
good <ieal to this increafe, cannot be doubted. .
Th£ value of the filver money which circu-
lated in Scotland before the Union, in 1707, and
which, immediately after it, was brought into
the bank of Scotland in order to be re-coined,
anK)Ufltcd to 411,117/. 10 j. gd. fterling. No
account has been got of the gold coin ; but it
appears from the ancient accounts of the mrht of
Scotland, that the value of the gold annually
coined fomewhat exceeded that of the filver*.
There were a good many people too upon this
occafion, whp, from a diffidence of repayment,
did not bring their filver into the bank of Scot*
land : and there was, befides, fome Englifli coin,
which was not called in. The whole value of
the gold and filver, therefore, which circulated
in Scotland before the Union, cannot be eftimated
at left than a million fterling. It feems to have
conftituted almoft the whole circulation of that
country ; for though the circulation of the bank
of Scotland, which had then no rival, was con-
fiderable> it ieems to have made but a very finalt
paat of the whdk. In the prefent times the

• See Rttddiman's Preface .to Anderfon's Diplomata, &c.
Scotias.

whole

444 THE NATURE AND CAUSES OF

BOOK whole circulation of Scotland cannot be eftimate4
at lefs than two millions^ of which that part
which confifts in gold and filvcr, moft probably,
does not amount \o half a miUion. But though
the circulating gold and filver of Scotland have
fufFcrcd fo great a diminution during this period,
its real riches and prolpcrity do not appear to
have fufFcrcd any. Its agriculture, manufa£bures,
and tracje, on the contrary, the annual produce of
its land and labour, have evidendy been aug^
mentcd.

It is chiefly by difcounting bills of exchange,
that is, by advancing money upon them before
they are due, that the greater part of banks and
bankers ifllie their promiflbry notes. They de-
du6t always, upon whatever fum they advance,
the legal intereft till the bill fhall become due.
The payment of the bill, when it becomes due,
replaces to the bank the value of what had been
advanced, together with a clear profit of the in-
tereft. The banker who advances to the mer-
chant whofe bill he difcounts, not gold and iilvcr,
but his own promiflbry notes, has the advantage
of being able to difcount to a greater amount
by the whole value of his promiflibry notes, which
he finds by experience, are commonly in circqla-
tion. He is thereby enabled to make his clear
gain of intereft on fo much a lai^er fum.

The commerce of Scotland, which at prefent
is not very great, was ftill more inconfider^le
when the two firft banking companies were efta*
bliihedif and thofe conipanies wpyld have had
but^ little trade;i had diey confined their bufinds

THE WEALTH OF NATIONS 44j

to the difcounting of bilk of exchange. They chap.
invented, therefore, another method of iffuing
their promiflbry notes; by granting, what they
called, cafh accounts, that is by giving credit to
the extent of a certain fum (two or three thou-
fand pounds, for example), to any individual
who could procure two perfohs of undoubted
credit and good landed eftate to become furety
for him, that whatever money Ihould be ad-
vanced to him, within the fum for which the
credit had been given, ihould be repaid upon de-
mand, together with the legal intereft. Credits
of this kind are, I believe, commonly granted
by banks and bankers in all different parts of
the world. But the eafy terms upon which the
Scotch banking companies accept of re-payment
are, fb far as I know, peculiar to them, and have,
perhaps, been the principal caufe, both of the
great trade of thofe companies, and of the bene-
fit which the country has received from it.

Whoever has a credit of this kind with one
of thofe companies, and borrows a thoufand
pounds upon it, for example, may repay this
fum piece-meal, by twenty and thirty pounds at
a time, the company difcounting a proportion-
able part of the interefl of the great fum from
the day on which each of thofe fmall fums is
paid in, till the whole be in this manner repaid.
All merchants, therefore, and almofl all men of
bufinefs, finds it convenient to keep fuch cafh
accounts with them, and are thereby interefled
to promote the trade of thofib companies, by
readily receiving their notes in all payments,

and

44l( THE NATURE AN1> CAUSES Otf

1 o o K 3nd by cnconraging jft thofe with whom rfiey
have any influence to do the fennc. The banks^
when their cuftomers apply to thenrr for money,
generally advance it to thent m their own pro-
miffiwy notes. Thele the merchants p^ away
to the manafadhjrers for goods, the manirfac-^
turers to the farmers for materials and provi-
fions, the farmers to their lan(flor& for rent,
the kndbrds repay them to the merchants fer
the conveniencies and luxuries with which they
ftipply them,, and the merchants again irmm
riiem to the banks in order to bdaitce their
caffi accounts, or to replace what they may hare
borrowed of them ; and thus aftnoft the whole
money bufineft of the country is tranla6lred by
means of them. Hence the great tratfer of thofc
companies.

Br means cf thofe calh accounts every mer-
chant can, without iwrprudfence, carry on* a
greater trade than he othcrwife could* do. ff
there arc two- merchants, one ift London, and
the* other in- Edinburgh, wfto employ equd ifects
in the feme branch, of trade, the Edinburgh
merchant can*, without imprudbncc, carry on a
greater trade, and give employment to a greater
number of people than the London merchant.
The London merchant muft always keep by him
a confiderable fum of money, either in his own
cofiers, or in thofe* of his banker, who* gives him
no intereft f6r it, in order to anfwer the demands
continually coming upon him for payment of
the good^ which he purchafes upon credit. Let
the ordinary' amount of this lum be fuppofed five

hundired

THE WEfALTB OF RATIONS/ ^^f

Htan^itd pounds. The value of the goods in c h a p.
hia watfcliouiib tnuft . alwaj^s. he lefs by* fwe hun-
dred pK^unds. tbaa it would hsuooe been, had j)€
noi been obliged txi> keep^ fuch a^ fum unenrK->
{dojred; Let us fbppofb that he generally difpofes of
his whole Ibock upon hanc^ or o^ goods to the
vskiQ q£ his whok flock upgn hand^ once in the
year. By being obliged to keep fo^ great a fum*
m>€«iplQyedi he aiuft fell ia^ a year fisre hundred
pouiids woj:tb lefs. goods than be nright otherwise:
hav^ done. Ha$ annual profits, mufl: he lefs bgr
aU: thfMr Im eould hasre made* by the fale of fivef
hj^ndredi pounds worth mote- goods ; and: the
nui3ttb«n of peopde employed in preparing his.
gpods for the naarket^. muft be^ le&- by all tho(b
tbdt: fire: hundred* pounds more ftdck could have*
eniplog^dw The merchant? in« Edinburgh, on the-
otfafir hand; i keeps no money unemployed for
anfwering fuch occafional demands. When they
aAualiy Gooie upon him> he fatisfies them from-
his cafh account with the bank, and gradudly
replaces the fum^ borrowed with the money or
paper which, comes. in from the occafional fales of'
his goods. With the fame flock, therefore, he:
cani without imprudence, have at all times in*
hisi warchoufe ajarger quantity of goods than the-
London merchant; and can thereby both make*
a. greater profit himfclf, and give conflant em-
ployment to a greater number of induflrious-
popf^e who prepare thofe goods fbr the market.
Hence the^ great benefit which the country has*
derived -fronr this trade.

The*

II«

44S THE NATURE AND CAUSES OP

B 0^0 K Thb fiicility of difcounting biUs of exchange^
it m^ be thought indeed^ gives the Engliih mer^
chants a conveniency equivalent to the calh ac-
counts of the Scotch merchants. But the Scotch
merchants, it muft be remembered, can difcounc
their bills of exchange as eafily as the Englifh
merchants ; and have, befides, the additional con*
veniency of their cafli accounts.

The whole pjiper money of every kind which
can eafily circulate in any country never can
exceed the value of the gold and filver, of which
it fupplies the place, or which (the commerce
being, fuppofed the fame) would circulate there,
if there was no paper money. If twenty (hilling
notes, for example, are the lowed paper money
current in Scodand, the whole of that currency
which can eafily circulate there cannot exceed
the. fum of gold and filver which wojjld be ne-
cefiTary for traniadmg the annual exchanges of
twenty {hillings value and upwards ufually tranf-
afted within th^t country. Should the circu-
lating pap^r at any time exceed that fum, as the
excefs could neither he Tent abroad nor be em-
ployed in the circulation of the country, it muft
imiDie^iat^ly . return upon the banks to be ex-
changed/qr. gold and filver. Many people would
iromediately perceive that they had more of ihis
paper than was neceflary for tranfadling their
bufinefs at home, and as they could not fend it
abroad, they would immediately demand pay-
ment of it from the banks. When this fuper-
fluous paper was converted into gold and filver,
they could eafily find a ufe for it by lending it

abroad »

THE WEALTH OF NATIONS. ' ^ / 449

abroad ; but they could find ^one while it re- c h a p.

all

mained in the fhape of paper. There would inti-
mediately, therefore, be a run upon the banks to
the whole extent of this fuperfluous paper^ and,
if they ftiewed any difficulty or backwardnefs in
payment, to a much greater extent; the alarm,
which this would occafioUi occeffarily increaling-
the run.

Over and above the exp^nces. which are com-
mon to every branch of trade ; fuch as the ex-
pence of houfe-rent, the wages of fervants,
clerks, accountants, &c. ; the expences peculiar
to a bank confift chiefly in two articles : Firft,-
in the expence of keeping at all times in its cof-
fers, for anfwering the occafional demands of the
' holders of its notes, a large fum of money, of
which it lofes the intereft : And, lecondly, - in
the expence of repleniftiing thofe coflTers as faft
as they are emptied by anfwering fuch occafional
demands.

A BANKING company, which iflues more paper
thaii. can be employed in the circulation of the
'country, and of which the excefs is continually
returning upon them for payment, ought to in-
creafe the quantity of gold and filver, which they
keep at all times in their coffers, not only in
pro^rtion to this exceffive increafe of their cir-
culation, but in a much greater proportion;
their notes returning upon them much fafter
than in proportion to the excefs of their quan-
tity. Such a compaay, therefore, ought to -in-
creafe the fixft article of their expence, not only

Vol. I> G g in

450 THE NATURE AND CAUSES OF

BOOK- in proportion to * this forced increafe of their
buQnefs, but in a much greater proportion.

The coffers of fuch a company too, though
they ought to be filled much fuller, yet mult
empty themfelves much fafter than if their bufi-
nefs was confined within more reafbnable bounds,
and muft require, not only a more violent, but a
more conftant and uninterrupted exerdon of ex^
pence in order .to replenifii them. The coin
too, which is thus continually drawn in fuch
large quantities from their coffers, cannot be
employed in the circulation of the country. It
comes in place of a paper which is over and
above what can be employed in that circula-
tion, and is therefore over and above what can
be employed in it too. But as that coin will
rtot be allowed to lie idle, it muft, in one Aape
or another, be fent abroad, in order to find that
profitable employment which it_ cannot find at
homes and this continual exportation of gold
and filver, by enhancing the difficulty, muft ne-
ceflarily enhance ftill further the cxpencc of the
bank, in finding new gold and filver in order to
replenifh thofe coffers, which empty themfelves
fo very rapidly. Such a company, therefore,
muft, in proportion, to this forced increafe of
their bufinefs, increafe the lecond article of tflfcir
cxperice ftill more than the firft.

Let us fuppofe that all the paper of ^ parti-
cular bank, which the circulation of the country
can eafily abforb and employ, aniounts cStaftly to
forty thouiand pounds ^ and that for anfwering

occafional

THE WEALTH OF NATIONS. 4jt

cccafional demands, this bank is obliged to keep chap.
£ltall times in its coffers ten thoufand pounds in ^^'
jgold and filver. Should this bank attempt to
circulate forty-four thoiffand pounds, the four
thoufand pounds which are over and above what
the circulation can eafily abforb and employ,
will return upon it almoft as faft as they are
iffued. For anfwering occafional demands, there-
fore, this bank ought to keep at all times in
its coffers, not eleven thoufand pounds only, but

_ fourteen thoufand pounds. It will thus gain no-
thing by the intereft of the four thbufand pounds
exceflive circulation 5 and it will lofe the whole
expence of continually coUefting four thoiafand
pounds in gold and filver, which will be conti-
nually going out of its coffers as fall as they are
brought inta them.

Had every particular banking company al-
ways underftood and attended to its own parti-
cular intereft, the circulation never could have
been overftocked with paper money. But every
j>aftiGulaif banking company has not always un-
d^ftood or attended to its own particular inrerefl:>
and th^ circulation has frequently been overftocked
with paper nnoney.

By iffuing too great a quantity of paper, of
which the cxcefs was continually returning, in
ordet- to be exchanged for gold and filver, the
bank of England was for many years together
obliged to coin gold to the extent of between
eight hundred thoufand pounds and a million a

"^ year 5 or at an average, about eight hundred
Hktid fifty thotrfand pounds. For this^great coin-

Gg 2 age

453 THE NATURE AND CAUSES OF

'. B o o ic age the bank (in confcqucnce of the ^ worn and
/•_^ degraded ft ate into which the gold coin had
fallen a few years ago) was frequently obliged
.to purchafe gold buUiom at the high price of
four pounds an ounce, which it fdon after iflued
in coin at 3/. 17^. io|^, an ounce, lofing in
this manner between two and a half and three
per cent, upon the coinage of fo very large a
fum. Though the bank therefore paid no
feignorage, though the government was properly
at the expence of the coinage, this liberality of
government did not prevent altogether the expence
^ of the bank.

The Scotch banks, in confcquence of an ex-
cefs of the fame kind, were all obliged to em-
ploy conftantly agents at London to colleft
money for them, at an expence which was fel-
dom below one and a half or two per cent. This
nioney was fent down by the waggon, and in-
forecT by the carriers at an additional expence of
three quarters per cent, or fifteen ihillings on
the hundred pounds. Thofe agents were not
always able to replenifh the coffers of their em-
ployers fo faft as they were emptied. In this
cafe the refou rce of the banks was, to draw upon
their correfpondents in London bills of exchange
to the extent of the fum which they .wanted.
When thofe correfpondents afterwards drew
upon them for the payment of this fum, together
with the intereft and a commiflion, fomc of thc^
banks, from the diftrefs into which their exccf-
five circulation had thrown them, had fbmetinaes
no other means of fatisfying this draught but by

drawing

THE WEALTH OF NATIONS. 453

drawing a fecond fet of bills either upon- the chap.
fone, or vpon ,fome other correfpondents in
London ; afnd the fame fum, or rather bills for
the fame fuoi^ would in this manner make; fome-
times more than two or three journies : the
debtor bank, paying always the intereft and
commiffion upon the whole accumulated fum, -
Even thofe Scotch banks which never diftin-
guifhed themfelves by their extreme imprudence,
we're fometimes obliged to employ this ruinous
refource. .

The gold coin which was paid out either by
the bank of England, or by the Scotch banks,
in exchange for that part of their paper which
was over and above what could be employed in
the circulation of the country, being like wife
over and above what could be employed in that
circulation, was fometimes fent abroad in the
Ihape of coin, fometimes melted ^wn and fent,
abroad in the ihape of bullion, and fometimes %
melted down and fold to the bank of England at *
the high price of four pounds, an ounce. It was
the neweft, the heavieft, and the beft pieces only
which were carefully picked out of the whole
coin, and either fent abroad or melted ' down.
At home, and while they remain in the Ihape
of coin, thofe heavy pieces were of no more
value than the light : But they were of more
value abroad, or when rhelted down into bullion,
at home. The bank of England, notwithftand-
ing their great annual coinage, found to their
aftonifhment, that there was evtfry year the fame
fcarcity of coin ^s there had been the year be-

QS3 fore J

It'*

454 THE NATURE AND CAUSE$ 4X

BOOK fore ; and that notwithftanding the great quan*
tity of good and new coin which was every year
iffiied from the bank^ the ftate of the coin, in-r
ftead of growing better and better, became every
year worfe and worfe. Every year they found
thcmfelvcs under the neceflity of coining nearly
the fame quantity of gold as they had coined
the year before, and from the continual rife in
the price of gold bullion, in confequence of the
continual wearing and clipping of the coin, the
expence of this great annual coinage became
every year greater and greater. The bank of
England, it is to be obferved, by fupplying its
own coffers with coin, is indiredkly obliged to
fupply the whole kingdom, into which coin is
continually flowing from thofe coflfers in a great
variety of ways. Whatever coin therefore was
wanted to fupport this exceffive circulation both
of Scotch and Engliih paper money, whatever
« vacuities this exceffive circulation occafioned in
' the necefTary coin of the kingdom, the bank of
England was obliged to fupply them. The Scotch
banks, no doubt, paid all of them very dearly for
their own imprudence, and inattention. But the
bank of England paid very dearly, not only for
its own imprudence, but for the much greater
imprudence of almoft all the Scotch banks.

The over-trading of fome bold projeftors in
both parts of the united kingdom, was the ori-
ginal caufe of this exceffive circulation of paper
money. /

What a bank can with propriety advance to
a merchant or undertaker of any kind^ is not

6 either

THE WEALTH OF NATIONS.

«S5

cither the whole capital with which he trades, or c h a p»
even any confiderable part of that capital ; but
that part of it only, which he would otherwife be
obliged to keep by him unemployed, and in
ready money for anfwering occafional demands.
If ihe paper money which the bank advances
never exceeds this value, it can never exceed the
value of the gold and filver, which would necef-
farily circulate in the country if there was no
paper money j it can never exceed the quantity
which the circulation of the country can eafily
abforb and employ.

When a bank difcounts to a merchant a real
bill of exchange drawn by a real creditor upon a
real debtor, and which, as foon as it becomes

due, is -really paid by that debtor j it only tid-
vances to him a part of the value which he
would otherwife be obliged to keep by him unr
employed and in ready money for anfwering oc-
cafional demands. The payment of th^ bill,
when it becomes due, replaces to the bank the
value of what it had advanced, together with the
intereft. The coffers of the bank, fo far as its
dealings are confined to fuch cuftomers, refem-
ble a water pond, from which, though ar ftream
is continually running out, yet pother is con-
tinually running - in, fully equal to that which
runs out j {o that, without any further care or
attention, the pond keeps always eqiially, or
very near equally full. Little or no expence can
ever be neceflary for replenifliing the cofi^ers of
fuch a bank*

Gg4

A MER-

THE NATURE AND CAUSES Of

A MERCHANT, without Overtrading, may frc*
quently have occafion for a fum of ready money^
even when he has no bills to difcount. When a
bank, befides difcounting his biUs, advances him

ff likewiie upon fuch occafions, fuch fums upon his
cafh account, and accepts of a piece meal repay-
ment^ as the money comes in from the occafional
fale of his goods, upon the eafy terms of the
banking companies of Scotland ; it difpenies
him entirely from the neeeffity of keeping any

V part of his ftock by him unemployed and in

ready money for anfwering occafional demands.
When fuch demands aftually come upon him,
he can anfwer them fufficiently fi-om his cafli
account. The bank, however^ in dealing with
Ivch Guftomers, ought to obferve with great at-
tention, whether in the coiirfe of fome (hort

.« period (of four, five, fix, or eight months, for

example) the fum of the repayments which it
commonly receives fi'om them, is, or is not,
fully equal to that of the advances which it com-
monly makes to them. If, within the courfe
of fuch ftiort periods, the fum of the repayments.
from certain cuftomers is, upon moft occafions,
fully equal to that of the advances, it may fafely
continue to deal with fuch cuftomers. Though
the ftream which is in this cafe continuallv run-
ning out from its coffers may be very large, that
which is continually running into them muft be
at leaft equally large ; fo that without any further
care or attention thofe coffers are likely to be
always equally or very near equally fiiU ; and

Icarcc

THE WEALTH OF NATIONS, 45*7

fcarcc ever to require any extraordinary expcncft chap.
to replcnifh them. If, on the contrary, the fum
of the repayments , froai certain other cuftomers
falls commonly very much fhort of the ad-
vances which it makes to them, it cannot with
any fafety continue to deal with fuch cuftomers,
at leaft if they continue to deal with it in this
manner. The ftream which is in this cafe con-
tinually running out from its coffers is necefla-
rily much larger than that which is continually
running in; fo that, unlefs they are repleniflied
by fome great and continual effort of expence,
thofe coffers muft fdon be exhaufted altoge-
then

The banking companies of Scotland, accord-
ingly, were for a long time very careful to re-
quire frequent and regular repayments from all
their cuftomers, and did ndt care to deal with
any perlbn, whatever might be his fortune or
credit, who did not make, what they called, fre-
quent and regular' operations with them. By
this attention, befides faving almoft entirely the
extraordinary expence of replenilhing their cof-
fers, they gained two other very confiderable ad-
' vantages.

First, by this attention they were enabled to
make fome tolerable judgment concerning the
thriving or declining circumftances of their
debtors, without being obliged to look out for
any other evidence befides what their o\yn books
afforded them ; men being for the moft part
either regular or irregular in their repayments,
Recording as their circumftances are either thriv-
ing

. THE NATURE AND CAUSES Of

A MERCHANT, without oVcf- trading, may fre^
quently have occalion for a fum of ready money,
even when he has no bills to difcount. When a
bank, befides difcounting his bills, advances him

41 likewife upon fuch occafions, fuch fums upon his
cafti account, and accepts of a piece meal repay-
ment^ a^*the money comes in from the occalional
fale of his goods, upon the eafy terms of the
banking companies of Scotland; it difpenfes
him entirely from the neeeffity of keeping any

V part of his flock by him unemployed and in

ready money for anfwering occafional demands.
When fuch demands aftually come upon him,
he can anfwer them fufficiently from his cafh
account. The bank, however, in dealing with
lych Guftomers, ought to obferve with great at-
tention, whether in the courfe of fome fhort

y.^ period (of four, five, fix, or eight months, for

example) the fum of the repayments which it.
commonly receives from them, is, or is not,
fully equalto that of the advances which it com-
monly makes to them. If, within the courfe
of fuch fhort periods, the fum of the repayments.
from certain cuflomcrs is, upon mofl occafions,
fully equal to that of the advances, it may fafely
continue to deal with fuch cuflomers. Though
the flream which is in this cafe continuallv run-
ning out from its coffers may be very large, that
which is continually running into them mufl be
at leafl equally large ; fo that without any further
care or attention thofe coffers arc likely to be
always equally or very near equally ftill ; and

fcarcc

THE WEALTH OF NATIONS. 45>

fcarcc ever to require any extraordinary expencft chap.
to replenifh them. If, on the contrary, the fum
of the repayments from certain other cuftomers
falls commonly very much fhort of the ad-
vances which it makes to them, it cannot with
any fafety continue to deal with fuch cuftomers,
at leaft if they continue to deal with it in this
manner. The ftream which is in this cafe con-
tinually running out from its coffers is neceffa-
rily much -larger than that which is continually
running in; fo that, unlefs they are repleniflied
by fome great and continual effort of expence,
thofe coffers muft fdon be exhaufted altoge-
then

The banking companies of Scotland, accord-
ingly, were for a long time very careful to re-
quire frequent and regular repayments from all
their cuftomers, and did not care to deal with
any perlqn, whatever might be his fortune or
credit, who did not make, what they called, fre-
quent and regular' operations with them. By
this attention, befides faving almoft entirely the
extraordinary expence of replenifhing their cof-
fers, they gained two other very confiderable ad-
' vantages.

First, by this attention they were enabled to
make fome tolerable judgment concerning the
thriving or declining circumftances of their
debtors, without being obliged to look out for
any other evidence befides what their own books
afforded them ; men being for the moft part
either regular or irregular in their repayments,
Recording as their circumftances are either thriv-
ing

45l THE NATURE AND CAUSES OF

BOOR ing or declining. A private man who lends out
^ * his money to perhaps half a dozen or a dozen of
debtors, may, either by himfelf or his ^ents,
obfervc and enquire both conftantly and care-
fully into the condu£t and fituation of each of
them. But a banking company, which lends
money to perhaps five hundred different people,
and of which the attention is continually occu-
pied by objefts of a very different kind, can have
no regular information concerning the conduct
and circumftances of the greater part of its debt-
ors beyond what its own books afford it. In re-*
quiring frequent and regular repayments from all
their cuftomers, the banking companies of Scot-
land had probably this advantage in view.

Secondly, by this attention they fecured
themfelv^s from the poffibility of iffuing more
paper money than what the circulation of thcr
country could eafily abforb and employ. When
they obferved, that within moderate periods of
time the repayments of a particular cuftonner
were upon moft occafions fully equal to the ad-
vances which they had made to him, they might
be affured that the paper money which they had
advanced to him, had not at any time exceeded
the quantity of gold and filver which he would
otherwife have been obliged to keep by him for
anfwering occafional demands; and that, con-
fequently,' the paper money, which they had cir-
culated by his means, had not at any time ex-
ceeded the quantity of gold and filver which
would have circulated in the country, had there
been no paper money. The freqijency, regula-
rity

THE WEALTH OF NATIONS. ^59

rity and amount of his repayments would fuffi- c hap.
ciently deraonftrate that the amount of their ad-
vances had at no time exceeded that part of his
capital which he would otherwife have been
obliged to keep by him unemployed and in ready
money for anfwering occafional demands; that
is, for the purpofe of keeping the reft of his ca-
pital in conftant employment. It is this part of
his tapital only which, within moderate periods
of time, is continually returning to every dealer
in the Ihape of money, whether paper or coin,
and continually going from him in the fame
ihape. If the advances of the bank had com-
monly exceeded this part of his capital, the or*
dinary amount of his repayments could not,
within moderate periods of time, have equalled
the ordinary amount of its advances. The ftream
which, by means of his dealings, was continu-
ally runmng into the coffers of the bank, could
not have been equal to the ftream which, by
means of the fame dealings, was continually
running out. The advances of the bank paper,
by exceeding the quantity of gold and filver
which, had there been no fuch advances, he
would have been obliged to keep by him for an-
fwering occafional demands, might foon come
to exceed the whole quantity of gold and filver
which (the commerce being fuppofed the fatne)
would have circulated in the country had there
been no paper money; and confequently to ex-
ceed the quantity which the circulation of the
country could eafily aibforb and employ ; and the
excefs.of this paper money would immediately

have

4«b THE NATURE AND CAUSES OF

BOOK have returned upon the bank in order to be ex-
"' > changed, for gold and filver. This fecond advan-
tage, though equally real, was not perhaps fo
well undcrftood by all the different banking com-
panies of Scotland as the firft.

When, partly- by the cohveniency of difcount-
ing bills, and pardy by that of cafti accounts,
the creditable traders of any country can be dif-
pcnfed from the neceflity of keeping any part of
their flock by them unemployed and in ready
money for anfwering occafional demands, they
can reafonably expedt no farther afliftance from
banks and bankers, who, when they have gone
thus far, cannot, confiftently with their own in-
terefl and fafety, go farther. A bank cannot,
confiftently with its own interefl, advance to a
trader the whole or even the greater part of the
circulating capital with which he trades; be-
caufe, though that capital is continually return-
ing to him in the fhape of money, and going
from him in the fame fhape, yet the whole of the
returns is too diflant from the whole of the out-
goings, and the fum of his repayments could not
equal the fum of its advances within fuch mo-
derate periods of time as fuit the conveniency of
a bank. Still lefs could a bank afford to ad-
vance him any confiderable part of his fixed
capital; of the capital which the. undertaker of
an iron forge, for exlample, employs in erecting
his forge and fmelting-houfe, his work-houfes
and warehoufesj the dwelling- houfes of his work-
men, &c. ; of the capital which the undertaker
of a mine employs in finking his fhafts, in greft-

ing

THE WEALTH OF NATIONS. 461

ing engines for drawing out the water, in niaking^c ha p.
roads and waggon-ways, &c. 5 of the capital
which the perfoh who undertakes to improve
land employs in clearing, draining, enclofing, ,
manuring and ploughing waftc and uncultivated
fields, in building farm-houfcs, with all their
neceflary appendages- of ftables^ granaries, &c.
The returns of the fixed capital are in almoft all
cafes much flower than thofe of the circulating
capital; and fuch expences, even when laid out
with the greateft prudence and judgment, very
feldom return to the undertaker till after a pe-
riod of many years, a period by far too diftant to
fuit the conveniency of a bank. Traders and
other undertakers may, no doubt, with great
propriety, carry on a verj' confiderable part^ of
their projects with borrowed money. In juftice
to their creditors, however, their own ; capital,
ought, in this cafe, to be fufEcient to^ enfure, if I
may fay fo, the capital of thofe creditors ; or to
render it extremely improbable that thofe credi*
tors fhould incur any lofs, even though the fuc-.
cefs of the projeft fliould fall very much fhort of
the expeftation of the projectors. Even with
this precaution too, the^ money which is bor-
rowed, and which it is meant fliould not be re-
paid till after a period of feveral years, ought not
to be borrowed of a bank, but ought to be bor-
rowed upon bond or mortgage, of fuch private
people as propofe to live upon the intereft of
their money, without taking the trouble them-
felves to employ the capital; and who are upon
that account willing to -lend that capital to fuch

people

4£s THE NATDRfe AND CAUSE* OP

BOOK people of good credit as are likely to keep ir (pf
feveral years. A bank, indeed, which lends its
money without the expence of ftampt paper, or
of attornies fees for drawing bonds and mortgages,
and which accepts of repayment upon the eaijr
terms of the banking companies of Scotland *
would, no doubt, be a very convenient creditor to
fuch traders and undertakers. But fuch traders
and undertakers would, furely, be moft incon-
venient debtors to fuch a bank.

It is now more than five -and- twenty years
fince the paper money iflued by the different
banking cpmpanies of Scotland was fully equal,
or rather was fomewhat more than fully equal,
to what the circulation of the country could
cafily abforb and employ. Thofe companies,
therefore, had fo long ago given all the afliftancc
to the traders and other undertakers of Scotland
which it is poffible for banks and bankers, con-
fiftently with their own intereft, to give. They
had even done fomewhat more. They had over-
traded a little, and had brought upon themfclves
that lofs, or at leaft that diminution of profitj
which in this particular bufinefs never fails to
attend the fhialleft degree of over-trading, Thofe
jtraders arid other undertakers, having got fo
much affiftance from banks and bankers, wilhed
to get ftill more. The banks, they feem to have
thought, could extend their credits to whatever
fum might be wanted, without incurring any
other expence befides that of a few reams of
paper. They complained of the contracted views
and daftardly fpirit of the direftors of thofe

banlu.

\
I

THE WEALTH OF NATIONS. 463

banks, which did not, they faid, extend their chap.
credits in proportion io the extenfion of the trade
of the country ; meaning, no doubt, by the ex-
tenfion of that trade the extenfiofi of their own
projefts beyond what they could carry on,
either with their own capital, or with what they
had credit to borrow of private people in the
ufual way of bond or mortgage. The banks,
they feem to have thought, were in honour
bound to fupply the deficiency, and to provide
them with all the capital which they wanted to
trade with. The banks, however, were of a dif-
fefent opinion, and upon their reftifing to extend
their credits, fome of thofe traders had recourfe
to an expedient which, for a time, ferved their
purpofe, though at a much greater expence, yet
as effeftually as the utmoft extenfion of bank
credits could have done. This expedient was •
no other than the well-known (hifc of drawing
and re- drawing; the Ihift to which unfortunate
traders have fometimes recourfe when they are
upon the brink of bankruptcy. The practice of
raifing money in this manner had been long
known in England, and during the courfe of the
late war, when the high profits of trade afforded
a great temptation to over-trading, is faid to.
have been carried on to a very great extent.
From England it was brought into Scotland, '
where, in proportion to the very limited com-
merce, and to the very moderate capital of the
country, it was foon carried on to a much
greater extent than it ever had been in England.

The

464 THE NATURE AND CAUSES OP

. The praftice of drawing and re-drawing is fo
well known to all men of bufincfs, that it may
perhaps be thought unneceffary to give an ac-
count of it. But as this book may come into
the hands of many people who are not men of
bufinefs, and as the efFefts of this praftice upon
die banking trade are not perhaps generally un-
derftood even by men of bufinefs themfelvcs, I
ihall endeavour to explain it as diftinftly as I
can.

The cuftoms of merchants, which were efla*
blifhed when the barbarous laws of Europe did
not enforce the performance of their contrails,
and. which during the courfe of the two laft cen-
turies have been adopted into the laws of all
European nations, have given fuch extraordinary
privileges to bills of exchange, that money is
more readily advanced upon them, than upon
any other fpecies of obligation ; efpecially when
they are made payable within fo fhort a period
as two pr three months after their date. If, when
the bill becomes due, the acceptor does not pay
it as foon as it is prefented, he becomes from that
moment a bankrupt. The bill is protefted, and
returns upon the drawer, who, if he does not
immediately pay it, becomes like wife a bank-
rupt. If, before it cariie to the perfon who pre-
fents it to the acceptor for payment, it had pajQTed
through the hands of feveral other perfons, who
had fuccefllvely advanced to one another the
contents of it either in money or goods, And who
to exprefs that each of them had in his turn

received

THE WEALTH OF NATIONS.

465

received thofe contents^ had all of them in their chap,
order endorfed, that is, written their names upon
the back of the bill ; each endorfer becomes in
his turn liable to the owner of the bill for thofe
contents, and, if he fails to pay, he becomes too
from that moment a bankrupt. Though the
drawer, acceptor, and endorfers of the bill fhould>
all of them, be perfons of doubtful' credit ; yet
ftill the fhortnefs of the date gives fome fecurity
to the owner of the bill. Though all of them
may be very likely to become bankrupts ; it is a
chance if they all become fo in fo fhort a time.
The houfe is crazy, fays a weary traveller to him-
felf, and will not ftancj very long; but it is z
chance if it falls to-night, and I will venture^
therefore, to fleep in it to-night.

The trader A in Edinburgh, we (hall fuppofe^
draws a bill upon B in London, payable two
months after date. In reality B in London owes
nothing to A in Edinburgh ; but be agrees :to
accept of A's bill, upon condition that before
the term of payment he ftiall redraw upon A in
Edinburgh for the fame fum, together with the
intereft and a commiffion, another bill, payable
likewife two months after date. B accordingly,
before the expiration of the firft two months, re-
draws this bill upon A in Edinburgh j who again^
before the expiration of the fecond two months,
draws a fecond bill upon B in London, payable
likewife two months after date; and before the
expiration of the third two months, B in London
re-draws upon A in Edinburgh another bill,
payable alfo two months after date. This prac-

VoL. I, H h tice

II.

j^66 THE NATURE AND CAUSES OF

B o o K rice has fomctimes gone on, not only for fcvcral
months, but for feveral years together, the bill
always returning upon A in Edinburgh, with
the accumulated intereft and commiifion of all
the former bills. The intereft was five per cent,
in the year, and the commiifion was never lefs
than one half per cent, on each draught. This
commiffion being repeated more than fix times
in the year^ whatever money A might raife by
this expedient muft necefiarily have coft him
fomething more than eight per cent, in the year,
and fometimes a great deal more> when either
the price of the commiffion happened to rife, or
when he was obliged to pay compound intereft
upon the intereft and commiffion of former bills.
This practice was called raifing money by circu-
lation.

In a country where the ordinary profits of
dock in the greater part of mercantile projedts
are fuppofed to run between fix and ten per
cent., it muft have been a very fortunate fpecu-
lation of which the returns could not only repay
the enormous expence at which the money was
thus borrowed for carrying it on; but afford,
befides, a good furplus profit to the projedtor.
Many vaft and extenfive projeds, however, were
undertaken,- and for feveral years carried on
without any other fund to fupport them befides
what was raiied at this enormous expence. The
projedors, no doubt, had in their golden dreams
the mofl: diftinft vifion of this great profit.
Upon their awaking, however, eitKer at the end
of their projedls, or when they were no longer

able

THE WEALTH Olf NATION*. ^

able to carry them on, they very feldoih, I believej c if a ^
had the good fortune to find it*. ' •

The bills which A in Edinburgh drew upon B
in liOndon, he regularly difcounted two months
before they were due with fome bank or banker
in Edinburgh ; and the bills which B in London
re-drew upon A in Edinburgh, Ke as regularl]^
difcounted either with the bank of England, or
ivith fome other bankers in London, Whatever
Was advanced upon fuch circulating bills, was, irt
Edinburgh, advanced in the paper of the Scotch
banks, and in London, when they were dif-
counted at the bank of England, in the paper of
that bank. Though the bills upon which this
paper had been advanced, were all of them re-
paid

* The method defi:ribed in the text was by no means either
the mod common or the moil expenfive one in which thofe
adventurers fometimes raifed money by circulation. It ixtf
quently happened that A in Edinburgh would enable B in
London to pay the firft bill of exchange by drawing, a few
days before it became due, a fecond bill at three months ^ate
npon the fame B in London. This bill, being payable to his
own order, A fold in Edinburgh at par; and with its contents
purchafed bills upon London payable at fight to the order of
B, to whom he Tent them by the poft. Towards the end ^of the
late war, the exchange between Edinburgh and London was
frequently three per cent, againft Edinburgh^ and thofe bills
at fight mud frequently have coft A that premium. This tranf-
afiion therefore being repeated at leall four times in the year^
and being loaded with a commiflion of at leaJl one half per
cent, upc^n each repetition, niui): at that period have coil A at
leafl: fourteen per cent, in the year. At other times A would
enable B to difcharge the iirft bill of exchange by drawing, a
few days before, it became due, a fecond bill at two months
date ; not upon B, but upon fome third perfon, C^ for ex-

H h 2 amplcj

4e» THE NATURE AND CAUSES , OF

B o- o K paid in their turn as foon as they became due ;
yet the value which had been really advanced
upon the firft bill, was never really returned to
the banks which advanced it; becauie, before
each bill became due, another bill was always
drawn to fomewhat a greater amount than the
bill which was foon to be paid; and the dif-
counting of this other bill was effentially nccef-
fary towards the payment of that which was foon
to be due. This payment, therefore, was altOr
gether fiftitious. The ftream, which, by means
of thofe circulating bills of exchange, had once
been made to run out from the coffers of. the
banks, was never replaced by any ftream which
really run into them.

example, in London, This other bill was made payable to
the order of B, who, upon its being accepted by C, difcount-
ed it with feme banker in London ; and A enabled C to dif-
eharge it by drawing, a few days before it became due, a third
bill, likewife at two months date, foroetimes upon his firft
correfpondentB, and fometimes upon fome fourth or fifth per-
fon, D or £, for example. This third bill was made paya-
ble to the order of C ; who, a^ foon as it was accepted, dis-
counted it in the fame manner with fome banker In London.
Such operations being repeated at leaft fix times in the^ear,
and being loaded with a commifiion of at lead one-half per
cent, upon each repetition, together with the legal jntereft of
five per cent., this method of raifing money, in the fame man-
ner as that defcribed in the text, mud have cod A fomething
more than eight per cent. By faving, however, the exchange
between Edinburgh and London, it was lefs expenfive than
that mentioned in the foregoing part of this note ; 'but then
it required an edablifhed credit with more houfes than one in
London, an advantage which, many of thefe adventurers
could not always find it eafy to procure.

The

THE WEALTH OF NATIONS. ^ 469

The paper which was iflued upon thofe cir- chap
culating bills of exchange, amounted, upon many
occafions, to the- whole fund deftined for carry-
ing on fome vaft and extenfive projeft of agri-
culture, commerce, or manufaftures ; and not
merely to that part of it which, had there been
no paper money, the projeftor would have been
obliged to keep by him, unemployed and in
ready money for anfwering occafional demands.
The greater part of this paper was, confequently,
over and above the value of the gold and filver
which would have circulated in the country, had
there been no paper money. It w^ over and
above, therefore, what the circulation of the
country could eafily abforb and employ, and
upon that account immediately returned upon
the banks in order to be exchanged for gold and
lilver, which they were to find as they could.
It was a capital which thofe projeftors had very
artfully contrived to draw from thofe banks^
not only without their knowledge or deliberate
confentj but for fome time, perhaps, without
their having the moft diftant fulpicion that they
had really advanced it.

When two people; who are continually draw-
ing and re-drawing upon one another, difcount
their bills always with the fame banker, he muft
immediately difcover what they are aboutj and
fee clearly that they are trading, not with any
capital of their own, but with the capit^ which
he advances to them. But this difcovery is not
altogether fo eafy when they difcount their bills
fometimcs with one banker, and Tometimes \^ith

H h 3 Another,

47» THE NATURE AND CAUSES pF

BOOK another/ and when the fame two perfpns do not
conftantly draw and re-draw upon one another^
but occafionally run the round of a great circle
of projedtorsj who find it for their intereft to
aflift one another in this method of raifuig money^
and to render it^, upon that account^ as difficult
as poffible to diftinguifh between a real and ^
fidtitious bill of exchange; between a bill drawn
by a real creditor upon a real debtor> and a bill
for which there was properly no real creditor but
the bank which discounted it; nor any real
debtor but the proje&or who made ufe of the
mo^ey* When a banker had even made this
difcovery, he might fometimes make it too late,
and might find that he had alre^^dy difcounted
the bills of thofe proje£kors to fo great an extent,
that, by refufing to difcount any more, he would
necefiarily make them all bankrupts, and thus,
by ruining them, might perhaps ruin himfclf.
For his own iniereft and Ikfety, therefore, he
might find it neceffary, in this very perilous fitu-
ation, to go on for fome time, endeavouring,
Jioweyer, to withdraw gradually, and upon that
account making every day greater and greater
difficulties about difcoqnting, in order to force
thofe projeftors by degrees to have recourfe,
cither to other bankers, or to other methods of
raifing money j fo as that he himfelf might, as
foon as poffible, get out of the circle. The dif-
ficulties, accordingly, which the bank of Eng-
land, which the principal bankers in London,
and which even the more prudent Scotch banks
t?eganjj after a certain timc:| and when all of them

had

THE WEALTH OF NATIONS. 47*

had already gojie too far, to make about dif- c h a f.
counting, not ' only alarnned, but enraged in the
highefl: degree thofe proje£tors. Their own dif-
trefs, of which this prudent and neceffary referve
of the banks was, no doubt, the immediate oc-
cafion, they called the diftrels of the country;
and this diftrefs of the country, they faid, was
altogether owing to the ignorance, pufiilanimity,
and bad condud of the banks, which did not
give a fufficiently liberal aid to the ipirited un-
dertakings of thofe who exerted themfelves in
order to beautify, improve, and enrich the coun-
try. It was the duty of the banks, they feemcd
to think, to lend for as long a time, and to as
great an extent as they might wifh to borrow.
The banks, however, by Fefufing in this manner
to give more credit to thofe^ to whom ■ they had
already given a great deal too much, took the
only method by which it was now poflible 'to favc
either their own credit, or the public credit of the
country.

In the midft of this clamour and diftrefe, a
new bank was eftabliftied in Scotland for the
exprefs purpofe of relieving, the diftrels of the
country. The defign was^ generous j but the
execution was imprudent, and the nature and
caufes of the diftrefs which it meant to relieve,
were not, perhaps, well underftood. This bank
was more liberal than any other had ever been,
both in granting cafti accounts, and in difcount-
ing bills of exchange. With regard to the latter,
it feems to have made fcarce any diftin<5tion be-
tween real and circulating bills, but to have dif-

H h 4 counted

47i THE NATURE AND CAUSES OF

BOO K counted all equally. It was the avowed principle
of this bank to advance, upon any reafonable
fecurity, the whole capital which was to be em-
ployed in thofe improvements of which the re-
turns are the mod flow and diftant, fuch as the
improvements of land. To promote fuch im-
provements was even faid to be the chief of the
public Ipiritcd purpofes for which it was infti-
tuted. By its liberality in granting cafh ac-
counts, and in difeounting bills of exchange, it,
no doubt, iflued great quantities of its bank
notes. But thofe v bank notes being, the greater
part of them, over and above what the circula-
tion of the country could eafily abforb and em-
ploy, returned upon it, in order to be exchanged
for gold and (ilver, as faft as they were iflued. Its
coffers were never well filled. The capital which
had been fubfcribed to this bank at two different
fubfcriptions, amounted to one hundred and fixty
thoufand pounds, of which eighty per cent, only
was paid up. This fum ought to have been paid
in at feve/al different inftalments. A great part
of the proprietors, when they paid in their firft
inftalment, opened a cafh account with the bank ;
and the direftors, thinking themfelves obliged
to treat their own proprietors with the fame
liberality with which they treated all other men,
allowed many of them to borrov^ upon this cafh
account what they paid in upon all their fubfe-
quent inflalments. Such payments, therefore,
pnly put into one coffer, what had the moment
before been taken out of another. But had
the coffers of . this bank been filled ever fo well.

Its

■ . THE WEALTH OF NATIONS. i 473

its exceflive circulation miift have emptied them c H a ?•
fafter ,than they could have been repleniflied by
any other expedient but the ruinous one of draw-
ing upon London, and when the bill became
due, paying it, together with intereft and com-
miflion, by another draught upon the fame place.
Its coffers having been filled fo very ill, it .is
faid to have been driven to this refource within
a very few months after it began to do bufinefs.
The cftates of the proprietors of this bank were
worth feveral millions, and by their fubfcription
to the original bond or contra^ of the bank,
were really pledged for anfw^ring ^11 its engage-
ments. By means of the great credit which ^Q
great a pledge neceffarily gave it, it was, not-
withftanding it^ too liberal CQnduft, enabled to
carry on bufinefs. for more than two years.
When it was pbliged to flop, it had in the circu-
lation about two hundred thoufand pounds in
bank notes. In order to fupport the circulation
of thofe notes, which were continually returning
upon it as fafl as they were iffued, it had been
conflantly in the praftice of drawing bills of ex-
change upon London, of which the number and
value were continually increafing, and, when
it ftopt, amounted to upwards of fix hundred
thoufand pounds. This bank, therefore, had,
in little more thap the courfe of two years, ad-
vanced to different people upwards of eight
hundred thoufand pounds at five per cent.
Upon the two hundred thoufand pounds which
it circulated in bank notes, this five per cent.
flight, perhaps, be confidered as cle^r gain,

without

474 THE NATURE AND CAUSES OF

POOR without any other deduflion befides the expence
- ^ . of management. But upon upwards of fix hun-
dred thoufand pounds^ for which it was cond^
nually drawing bills of exchange upon Loadon>
it was payingj in the way of i^tereft aad coqq*
mifnon^ upwards of eight per cent.> and was
confequently lofing more than three per cet^.
upon more than three-fourths o£ ail its deal-
ingSt

The operations of t|iis bank feem to have pro-
duced cfFefts quite oppofite to thofe which were
intended by the particular perfons who planned
and direfted it. They feem to have intended to
fupport the fpirited undertakings, for as fiich
they confidered them, which were at that time
carrying on in different parts of the country;
and at the fame time, by drawing the whole
banking bufinefs to themfclves, to fupplant all
the other Scotch banks; particularly thofe efla-
blifhed at Edinburgh, whofe backwardnefs in
difcounting bills of exchange had given fome
offence. This bank, no doubt, gave fome tem-
porary relief to thofe projeftors, and enabled
them to carry on their projedls for about two
years longer than they could odierwife have done.
But it thereby only enabled them to get ^fo much
deeper into debt, fo that when ruin came, it fell
fo much the heavier both upon them and upon
their creditors. The operations of this bank,
therefore, inftead of relieving, in reality aggra-
vated in the long-run the diflrefs which thofe
projeftors had brought both upon themfelvcs
jjnd upon their country. It would have been

much

THE WEALTH OF NATIONS* 47$

much better for themfelves, their creditors and c h a p.

II.
their country, had the greater part of them been

obliged to flop two years fooner than they

aftually did. The temporary relief, however,

which this bank afforded to thofe projeftors,

proved a real and permanent relief to the other

Scotch banks* All the dealers in circulating

bills of exchange, which thofe other banks had

become fo backward in difcounting, had recourfe

to this new bank, where they were received with

open arms. Thofe other banks, therefoi»e, were

enabled to get very eafily out of that fatal circle,

from which they could not otherwife have dif-

engaged themfelves without incurring a confider-

able lofs, and perhaps too even fome degree of

difcredit.

In the long-run, therefore, the operations of
this bank increafed the real diftrefs of the coun-
try which it meant to relieve ; and efFeftually re-
lieved from a very great diftrefs thofe rivals whom
it meant to fupplant.

At the firft fetting out of this bank, it was the
opinion of fome people, that how faft foever
jts coffers might be emptied, it. might eafily re-
plenifti them by raifing money upon the fecuri-
ties of thofe to whom it had advanced its paper.
Experience, I believe, foon convinced them that
this method of raifing money was by much too
flow to anfwer their purpofe; and that coffers
which originally were fo ill filled, and which
emptied themfelves fo very faft, could be re-
pleniflied by no other expedient but the ruinous
oqe of drawing hills upon London, and when

they

47* THE NATURE AND CAUSES OF

BOOK they became due, paying them by other draughts
upon the fame place with accumulated intereft
and cortimiffion. But though they had been
able by this method to raife money as fail as
they wanted itj yet, inftead of making a profit,
they muft have fufiered a lofs by every fuch ope-
ration ; fo that in the Jong-run they muft have
ruined themfelves as a mercantile company,
though, perhaps, not fo foon as by the more
cxpenfive pra6tice of drawing and re-drawing.
They could ftiU have made notching .by the inr
tereft of the paper, which, being over and above
what the circulation of the country could abfbrb
and employ, returned upon them, in order to be
exchanged for gold and filver, as faft as they
iffued iti and for the payment of which they
were themfelves continually obliged to borrow
money. On the contrary, the whole expence of
this borrowing, of employing agents to look out
for people who had money to lend, of negociacing
with thofe people, and of drawing the proper
bond or aflignment, muft have fallen upon them,
and have been fo much clear lofs upon the ba^
lance of their accounts. The projeft of replenifh-
ing their coffers in this manner may be com-
pared to that of a man who had a water-pond
from which a ftream was continually running
out, and into which no ftream was continually
running, but who prqpofed to keep it always
equally full by employing a number of people
to go continually with buckets to a well at
ibme miles dift^ce in prder to bring water tq
^■^pleniHi it.

But

THE WEALTH Of NATION*. 477

But though this operation had proved, not chap.
only prafticable, but profitable to the bank as a
mercantile company ; yet the country could have
derived no benefit fi-om it j but, on the con-
trary, muft have fufFered a very confiderabic Iqfs
by it.. This operation could not augment in the
finalleft degree the quantity of money to be lent/
It could only have .ere£ted this bank into a fore
of general loan office for the whole country*
Thole who wanted to borrow, muft have ' applied
jto this bank, inftead of applying to the private
perfons who had lent it their money. But a
bank which lends money, perhaps, to five hundred
different people, the greater part of whom its
directors can know very litde about, is not likely
to be more judicious in the choice of its debtors,
than a private perfon who lends out his money
among a few people whom he knows, and in
whofe fober and frugal conduft he thinks he has
good reafon to confide. The debtots of fuch a
bank, as that whofe condudt I have been giving
fome account of^ were likely, the greater part of
them, to be chimerical projedlors, the drawers
. and re-drawers of circulating bills of exchange,
who would employ the money in extravagant
undertakings, which, with all the affiftance that
could be given them, they would probably never
be able to complete, and which, if they Ihould
be completed, would never repay the expence
which they had really coft, would never afFprd a
fund capable of maintaining a quantity of labour
equal to that which had been employed about
them. The fober and frugal debtors of pri-
vate

47f THE NATURfi AND CAUSES 6F

B o 6 K vate perfbns, on the contrary, would be more
"* likely to eniploy the money borrowed in fober
undertakings which were proportioned to their
capitals, and which, though they might have
left of the grand and the marvellous, would have
more of the folid and the profitable, which
would repay with a large profit whatever had
been laid out upon them, arid which would thus
afford a fund capable of maintaining a much
greater quantity of labour than that which had
been employed Slbout them. The fuccefs of this
operation, therefore, without increafing in the
fmalleft degree the capital of the country, would
only have transferred a great part of it from pru-
dent and profitable, to imprudent and unprofitable
undertakings.

That, the induftry of Scotland languifhed for
want of tnoney to employ it, was the opinion of
the famous Mr. Law. By eftablifliing a bank of
a particular kind, which he feems to have ima-
gined might ifliie paper to the fimount of the
whole value of all the lands in the country, he
propofed to remedy this want of money. The
parliament of Scotland, when he firfl propofed
his projeft, did not think proper to adopt it. It
was afterwards adopted^ with fome variations,
by the duke of Orleans, at that time regent of
France. The idea of the poffibility of multi-
plying paper money to almoft any extent, was
the real foundation of what is called the Mif-
fiflippi fcheme, the moft extravagant proje6t
both of banking and ftock-jobbing fhat, perhaps,
the world ever faw. The different operations

THB WEALTH OP NATIOKS. 47j

of this fcheme ire explained fo folly, {o ckarly, chap.
and with fo much ord^r aftd diftinftnefs, by
Mr. Du Verney, in his Examination of the
Political Rcfleftions upon Commerce and Fi-
nances of Mr. Du Tot, that I (hall not 'give any
account of them. The principles upon which ic
was founded arc explained by Mn Law himfel^
in a difcourfe concerning money and trade>
which he publifhed in Scotland when he firft
propofed his projeft. The fplendid, but vifion*
ary ideas which are fet forth in that and fome
other works iipon the fame principles, ftill con-
tinue to make an impreffion upon many people,
and have, perhaps, in part, contributed to that ex-
cefs of banking, which has of late been complained
of both in Scotland and in other places.

The bank of England is the greateft bank of
circulation in Europe. It was incorporated, in
purfuance of an aft of parliament, by a charter
under the great feal, dated the 27 th of July,
1694. It at that time advanced to government
the fum of one million two hundred thoufand
pounds, for an annuity of one hundred thoufand
pounds: or for 96,000/* a year intereft, at the
rate of eight per cent,, and 4,000/. a year for the
cxpence of management. The credit of the new
government, cftablifhed by the Revolution, we
may believe, muft have been very low, when it
was obliged to borrow at fo high an intereft.

In 1697 the bank was allowed to enlarge its ca-
pital ftock by an ingraftmcnt of 1,001,171 /. 10 jr.
Its whole capital ftock, therefore, amounted
at this time to 2,201,171/, 10 s. This .en-

II graftment

4fo mm NATURE AND CAUSES OF

BOOK gfaftment is faid to have been for the, lup-
port of public credit. In 1696^ tallies had been at
forty^ and fifcy» and fixty per cent, difcount^ and
bank notes at twenty per cent.* During the great
recoiriagc of the filver, which was going on at this
time, the bank had thought proper to difcontinue
the payment of its notes, which neceflarily oc-
c^oned their difcrcdir*

In purfuance of the 7th Anne, c. vii. the bank
advanced and paid into the exchequer, the iiim of
400,000/. ; making in all the fum of 1,600,000/.
which it had advanced upon its original annuity of
96,000/4 intereft and 4,000/. for expence of ma-
nagement. In 1708, therefore, the credit of go-
vernment was as good as that of private perfbns,
fince it could borrow at fix per cent, intereft, the
common legal and market rate of thofe times. In
purdiance of the fame aft, the bank cancelled ex-
chcquerbillstotheamountof 1,775,027/. lys. lold.
at fix per cent, intereft, and was at the fame tinie
allowed to take in fubfcriptions for doubling its
capital. In 1708, therefore, the capital of
the bank amounted to 4,402,343/^5 and it
had advanced to government the fum of
33375*027/. 17 J. lold.

By a call of fifteen per cent, in 17P9, there
was paid in and made ftock 656,204/. is. 9^/. ;
and by another of ten per cent, in 1710,
501,448/. lis. lid. In confcquence of thofe
two calls, therefore, the bank capital amounted to
5'559»995^- H-^- 8^/.

• James PollIcihwaite*s Hiftory of the Public Revenue,
page 30 1.

^ THE WfiALttt dF NATIONS. 481

In purfuance of the 3d George I. c. 8. the ^ ^ ^^ ^^
\>Mk delivered up two millions of exchequer bills
to be cancelled. It had at this tinre, therefore,
advanced to government 5)37 5^027 /. ijs. 10 di
In piirfuance of the 8th George I. c. ai. the
bank j^urchafed of the Sotith Sea Compaqyi {lock
to the amount of 4,ooo,odo/. : arid in 1722, in
confequence of the ifubfcriptions which it had
taken in for enabling it to make this purchafc,
its capital ftock was increafcd By 3,400,000/.
At this time, therefore, the bank had advanced to
the public 9,375^627/. lys. 105^.5 arid its capi-
tal ftock amounted only to 8^959,995/. 14J. 8^.
It was upon this occafion that the fum which
the bank had advanced to the public, and for
which it received ihtereft, began firft to exceed
its capital ftock, or the funi for which it paid a
dividend to the proprietors of bank ftock ; or^ in
other words, that the bank began to have an un-
divided capita], over and above its divided one.
It has continued to have- an undivided capital of
the fame kind ever fince. In 1746, the bank
had, upon different occafions, advanced to the
public 11,686,800/. and its divided capital had
been raifed by different calls and fubfcriptions to
16,7803000/. The ftate of thofe two fums has con-
tinued to be the fame ever fince. In purfuance of
the 4th of George IIL c. 25. the bank agreed to
pay to governnient for the renewal of its char-
ter 110,000/. without intereft or repayment.
This furri, therefore, ^id not increafe either of
thofe two other fums.

Vol. L I i The

THE NATURE AND CAOSES OP

The dividend of the hank has yaried accord^
ing to the variations in the raite of the intereft
which it ha#, at different timcsy received for the
money it had advanced to the public^ as well as
according to other circqmftaxKes. This rate of
intereft has gradually been reduced from dghr
to three per cent. For fome years paft the
bank dividend has been at five wd a lialf per
cent*

The ftability of the bank of Eng^nd is equal
to diat of the Britifh government. All dkat it has
advanced to the pdblic muft be loft before its
creditors can fuftain any lof^. No other bank-
ing company in England can be eftablifhed by
aft of parliament, or can confift of more than fix
members. It a£bs> not only as an ordinary bank,
but as a great engine of ftate. It receives and
pays the greater part of the annuities which are
due to the creditors of the public, it circulates
exchequer bills, and it advances ^o government
the ann^ amount of the lai^ and mak taxes^
which are frequently not paid up till fome years
thereafter. In thofe cKfTereni operations, its duty
to the public may fometimes have obliged it,,
without any fault of Its direftors,. to overftock the
circulation with paper money. It likewifc dif-
counts merchants bills, and has, upon feveral dif-
ferent occafions, fupported the credit of the prin-
cipal houfes,. not only of England, but ' of Ham-
burgh and Holland* Upon one occafionj in I76j>
it is faid to have advanced for this purpofe, in
one week, about i,6oo>ooo /• -, a great part of it

Tiafi WEALTH OP NATI0N3- 483

in bullion. I do not> however, pretend to war- c ha p.
rant either the grcatncfs of the fum, or the fhort-
nefe of the tiitie. Upon other occafions, this great
company has been reduced to the ^ neceffity of
paying in fixpences.

It is not By augmenting the capital of the
country, but by rendering a greater part of that
capital aftive and productive than would other-
wife be fo> that the nioft judicious operations of
banking can increalc the induftry of the country.
That part of his capital which a dealer is
obliged to keep by him iinemployed, and in
ready money for anfwering occafional demands,
is fo much dead Itock, which, fo long as it re-
mains in this fituation, produces nothing either
to him or to his country. The judicious opera-
tions of banking enable him to Convert this dead
ftock into aftive and produftive ftock ; into ma-
terials to work upcSn, into tools to work with,
and into provifions and fubfiftence to work for;
into ftock which produces fomething both to
himfelf and to his country* The gold and filver
money which circulates in any country, and by
means of which the produce of its land and la-
bour is annually circulated and diftributed to
the proper confumers, is, in the fame manner as
the ready money of the dealer, all dead ftock.
Jt is a very valuable part of the capital of the
country, which produces nothing to the country.
The judicious operations of banking, by fubfti-
tuting paper in the room of a great part of this
gold *nd- filver, enables, the country to convert a

I i 2 great

■ ^,1^ ^ 8T^^ P^rt of this dead dock into active and pto^
duiflive ftock; into dock which produces fbme--.
thing to the country. The gold and filver mo-
ney which circulates in any country may very
properly be compared to a highway, whichy
while it circulates and carries to market all the
grals and com of the country, produces idelf not
a fingle pile of either. The judicious operations
of banking, by providing^ if I may be allowed
fo violent a metaphor, a fort of waggon-way
through the air; enable the country to convert,
as it were, a great part of its highways into good
paftures and corn-fields, and thereby to increafe
very confiderably the annual produce of its land
and labour. The commerce and induftry of the
country, however, it muft be acknowledged,
though they may be fonaewhat augmented; can-
not be altogether fo fecure, when they are thus,
as it were, fufpended upon the Da^alian wings
of paper money, as when they travel about upon
the folid ground of gold and filver. Over and
above the accidents to which they are expofed
from the unfkilfulnefs of the condu6tors of this
paper money, they are liable to feveral others,
from which no prudence or fkill pf thofe con-
duftors can guard them.

An unfuccefsful war, for example, in which
the enemy got pofleflion of the capital, and con-
fequcntly of that treafure which fupported the
tredic of the paper money, would occafion a
much greater confufion in a country where tha
whole circulation was carried on by paper, thaa

"THE WEALTH OP NATIONS* '• 4g>

in one where the: greater part. oF it was carried oit ^ ^ a Pv
by gold and filverl - ;Thie< iilual inftrument of
^mmerce having loft its . value, no exchanges'
cotdd be made but. cither: by barter or upon crc--
dit. - AU taxes, having been ufudly pa^id i»
paper money,: the .prince 'wpuld not have where-;
^yithal either to ,pay :his ' troops, or.to furnilh hi^.
miagazin^s ; and the .ft^te of the country would
be much more irretrievable than if the greater'
part of it$ circulation had confifted in gold and
filven A ' prince, anxious to maintain his domi-^
nions at all times in the ftate in which he can
moft eafily defend them, ought, upon this ac-
QQunt, to guard, not only againft that pxceflive
multiplication of paper naoney which ruiqs the
very banks which iflue it ; but even againft that
multiplication of it, which enables them to fill
the greater, part of the circulation pf the country
with it, .

The circulation of every country may be con-^
fidered as divided into two different branches ;
the circulation of the dealers with one another,
and the circuUtion between the dealers and the
confumers. Though th^ fame pieces of money,
whether paper or metal, may be employed fome-
times in the one circulation and fometimes iq the
other i yet as both are conftantly going on at the
fgme time, each requires a certain ftock of mo-
ney of one kind or another, to carry it on. The
value of the goods circulated between the differ-
ent dealers, never can exceed the value of tho,fe.
cif?ulated between the dealers and the confu.m^

l\ 3 ^^5 i

4S6 THE NATtntl AND CAUSBS OP

B o OK ers; whatever is bou^ bf die dealers, being
uldniaadf deffined to be fold to die oonfiimers.
The circuJacion bctiwea die dcdcrs, as it b car-
ried OD b^ idudefidCj requiies genenfly a pretty
krgp iiim for every particolar trzaSidion, That
between the dealers and die conftimers^ on the
contrary, aa it is generally canied on by retaD,
frequendy requires but very fihall ones, a fliil-
ling» Or evm a halfpenny, beii^ often Efficient,
But finall fums circulate much fafter than large
ones. A (hilling changes mafters more fire,
quendy than a guinea, and a hal^nny more
frequently than a fhilling. Though the annual
purchafes of all the confumers, therefore, are at
leaft equal in value to thofo of all the desders,
they can generally be tranfaded with a much
imaller quantity of money ; the fame pieces, by
a more rapid circulation, ferving as the inftru-
ment of many more purchafes of the one kincj
than of the other.

Paper nK>ney may be fo regulated, as cither
to confine itfelf very much to the circulation be-
tween the different dealers^ or to extend itfelf
likcwife to a great part of that between the deal-
ers and the confumers. Where no bank notes
are circulated under ten pounds value, as in
London, paper money confines itfelf very much
to the circulation between the dealers. When ^
ten pound bank note comes into die hands of a
confumer, he is generally obliged to change it at
the firft {hop where he has occafion to purchale
live fliillin^ worth of goods j fo that it often re-

t^rn§

9HE WEALTH OP NATIONS, 4*7

turns into, die hands of a dealer, before the cori^
fumer has fpent the fortieth part of thd isioney*
Where bank notes are UTutid far fo fmaU fums a^
twenty fhillings^ as in Scotland, paper money
extends kielf to a confiderable part of the ditcu^
lation betweeen dealers and confunmers. Before
the a£t of parliament, which put a flop to thd
circulation of ten and five (hilling notes, it filled
a ftill greater part of that circulation. In thtf
currencies of North America, paper was com-
monly liTued for fb fmall a fum as a fhilling, and
filled almofl: the iwhok of that circulation. In
fome paper currencies of Yorfcfhire, it was iffued
even for fo fmall a fum as a fixpence.

Where the liTuing of bank notes for fuch very
fmall films is allowed and commonly praftifed,
many moean people are both enabled andencou*-
raged to become bankers, A perfon whofe pro-
miflbry note for five pounds, or even for twenty
fliiliings, would be rcjeded by every body, wilt
get it to be received without fcruple when it is
iflued for lb fmall a fum as a fixpehce. But the
frecjuent bankruptcies to which fuch beggarly
bankers muft be liable, may occafion a very con-
fiderable inconveniency, and fometimes even a
very great calamity, to many poor people who
had received their notes in payment.

It were better, perhaps, that no bank notes
were iffued in any part of the kingdom for a
fmaller fum than five pounds. Paper money
would then, probably, confine itfelf, in every
part of. the kingdom, to the circulation between

114 the

488 THE NATURE AND CAUSES OP

BQ o K thedi£Ferent dealers^ as much as it docs at pre^
fent in London^ where no bank notes are ifilied
under ten pounds values five pounds being» in
moft parts of the kingdom^ a fum which, though
it will purchafe, perhaps, little more than half
the quantity of goods> is as much confidered,
and is as feldom ipent all at opce, as ten
pounds are amidft the profule expence of Lon*
don.

Wherb paper money, it is to be obferved, is
pretty much confined to the . circulation between
<s]ealers and dealers, as at London, there is always
plenty of gold and fdver. Where it extends it-
felf to a confiderable part of the circulation be-r
tween dealers and confumers, as in Scodand, and
ftill more in North America, it baniflies gold
and fdyer almoft entirely fi"om the country ; air
moft all the ordinary tranfaftions of its interior
commerce being thus carried on . by paper. The
fuppreffion of ten and five IhiUing bank notes,
fomewhat , relieved the fcarcity . of gold and . fil ver
in ScQtland J and the fuppreffion of twenty fhil-
iing notes, would probably relieve it ftill more,
Thofe nietals are faid to have become more
abundant iq America, fince the fuppreffion of
i^me of their paper currencies. Th§y are faid,
likewife, to have been piore al^und^t before th^
inftitution of thofe cvirrencics.

Ti^ouGH paper money fhoulci be pretty much
confined to the circulation between dealers and
dealers, yet banks and bankers might ftill be
aWe to give nearly the fame affiftance to the in-

duftry

THE WEALTH OF NATIONS. ^99

4uftry and commerce of the country, as they had c h a rv
idonc when paper money filled almofl: the whole ^**
circulation. The ready money which a dealer is
obliged to keep by him, for anfwering occalional
demands, is deftined altogether for the circular
tion between himfelf and other dealers, of whom
he buys goods* He has no occafion to keep
any by him for the- - circulation between himfelf
and the confumers, who are his cuftomers, and
who bring ready money to^ him, inftead of tak^
ing any from him. : Though no paper money,
therefore, was allowed to be iffued, but for fuch
fums as would confine it pretty much to the cir-
culation between dealers and dealers 5 yet, partly
by difcounting real bills. of exchange, and parriy
by lending ■ upon calh accounts, banks and
bankers might ftill be able to relieve the greater
part of thofe dealers from: the neceffity of keep-
ing any confiderablc part of their flock by them,
unemployed and in ready money, for anfwering
occafional demands* They might ftill be able
to give the utmoft affiftance wJiich banks and
bankers can, with propriety, give to traders of
^f very kind.

To reftrain private people, it may be faid,
from receiving in payment the promiflbry notes
of a banker, for any fum whether great or finall,
when they themfelyes are willing to receive
them'j or, to reftrain a banker from ifluing fuch
notes, when all his neighbours are willing to
accept of them, is a manifeft violation of that
natural liberty which it is the proper bufinefs of

la\^

490 THE NATURE AND CAUSES OF

BOOK law, not to infringe, but to fuppoit« Such rc^
!^^ gulations may, no doubt, be confido'cd as in
fome refped a violation of natural liberty. But
thole exertions of the natural liberty of a few in-
dividuals, which mi^t endanger the iecurity of
the whole fociety, are, and ought to be, re-
ftrained by the laws of all governments f of die
moft free, as well as of the moft deipotical*
The obligation of building party walls, in order
to prevent the communication of fire, is a viola-
tion of natural liberty, exaftly of the fame kind
with the regulations of the banking trade which
are here propofed,

A PAPER money corififting in bank noces, ifibed
by people of undoubted credit, payable upon
demand without any condition, and in £at£k al-
ways readily paid as loon as prefentcd, is,, in
every rcfped, equal in value to gold and liJrcr
money; fmce gold and filvcr money can at any
time be had for it. Whatever is cidier bought
or fold for fuch paper, muft neceffarily be bought
or fold as cheap as it could have been for gold
and filver.

The increafe of paper money, it has been laid,
by augmenting the quantity, and confequently
diniiniihing the value of the whole currency^
neceffarily augments the money price of com-
modities. But as the quantity of gold and filver,
which is taken from the currency, is always
equal to .the quantity of paper which is added to
it, paper money does not neceffarily increafe the
quantity of the whole currency. From the be-
ginning

THE WEALTH OF NATIONS.

ginning of the kft century to the pfefent time, c hap*
provifions never were cheaper in: Scotland th^q
^^ ^759> though, from the circulation of ten
and five fliillirig bank notes, there was then
rnore paper money in die country than at prc^
Urtt. The proportion between the price of pro-
vifions in Scothnd and that in England, is the
fame now as before the great multiplication
of banking complies in Scotland. Corn is,
upon moft occafions, fully as chcap^ in Englan4
as in France; though there is a great deal of
paper money in England, and fcarce any in
France. In 1751 and in 1752, when Mr. Hume
piublilhcd his Political Difeourfes^ and loon after
the great miiltiplication of paper money in Scot-^
land, there was a very fenfible rife in the price
of provifions, owing, probably, to the badnels
of the ^i^m^ and not to the multiplication of
paper money.

It would be oAcrwife, indeed, with a paper
money confifting in promiffory notes, of which
the immediate payment depended, in any re-
fpeft, either upon the. good will of thofe wIkj
iiSued them j or upon a condition which the
holder of the notes might noc always have it in
Jiis power to fulfil ; or of which the payment was
not exigible till after a certain number of years,
and which in the mean time bore no intereft.
Such a paper money would, no doubt, fall more
or lefs below the value of gold arid filver,. ac-
cording as the difficulty or uncertainty of obtain-
ing imipediatc payment was fuppofed to be

greater

49< THE NATURE AND CAUSES OF

BOOK greater or lefs ; or according to the greater or
Icfs diftance 6f time at which payment was exi-
gible.

Some years ago the different banking com-
panies of Scotland were in the praftice of infert-
ing into their bank notes, what they called an
Optional Claufe, by which they proriiifed pay-
ment to the bearer, either as foon as the note
ifeould be prefented, or, in the option of the
directors, fix months after fuch prefentment, to-
gether with the legal intereft for the faid fix
months. The direftors of fome of thofe . banks
fometimes took advantage of this optional claufe,
and fometimes threatened thofe who demanded
gold and filver in exchange for a confiderablc
rmmber of their notes, that they would take ad-
vantage of it, unlefs fuch dcmanders would content
themfelves with a part of what* they demanded.
The promiflbry notes of thofe banking com-
panies conftituted at th^t time the far greater
pdrt of the currency of Scodand, which this un-r
certainty of payment neceffarily degraded below
the value of gold and filver money. During the
continuance of this abufe (which prijvailed
chiefly in 1762, 1763, and 1764), while the ex-
change between London and Carlifle was at pai,
that between London and Dumfi-ies would fome-
times be four per cent, againft Dumfiies, though
this town is not thirty miles diftant from Carlifle,
But at Carlifle, bills were paid in gold and fil^
ver ; whereas at Dumfries they were . paid in
Scotch bank aotcsj and -the ynpertainty of get-

tini

THE WEALTH OF NATION?. 49I

lihg thofe bank notes exchanged for gold and chap;
filver coin had thus degraded them four per cent,
below the value of that coin- The fame aft of
parliament which fupprefled ten and five fliilling
bank notes, fuppreiTed likewiie thi^ optional
claufe, and thereby reftored the exchange be-
tween England and Scotland to its natural rate^
or to what the courfe of trade and remittances
might happen to make it.

In the paper currencies of Yorkfhire, the
payment of fo fmall a fum as a fixpcnce fome-
times depended upon the conditioh that the
holder of the note fhould bring the change of a
guinea to the perfon who iffued it ; a condition-,
which the holders of fuch notes might frequently
find it very cUfficult to fulfil, and which muft
have degraded this currency below the value of
gold 'and filver money. An aft of parliament,
accordin^y, declared all fuch claufes unlawful,
and fupprefled, in the fame manner as in Scot-
land, all promiflTory notes, payable to the bearer,
under twenty (hillings value.

The paper currencies of North America con-
fifted, not in bank notes payable to the bearer on
demand, but in a government paper, of which
the payment was not exigible till feveral years
after it was iflued : And though the colony go-
vernments paid no intereft to the holders of this
paper, they declared it to be, and in faft ren-
dered it, a legal tender of payment for the fuH
value for which it was iflued. But allowing the
colooy fecurity to be perfeftly good, a hundred

pounds

494 *rflB pfATtTRli AN1> CA08E8 d?

^ O^^OK poiinds payable fifteen ^ars hence, &r examjik^
in a country where intercft is at fa per ceot. is
worth little more than forty pounds ready monqr^
To oblige a creditor, therefore, to accept of this
as fuU payment for a debt of a hundred. p(ninds
dually paid down in ready money, was m aft
of fuch violent injuftice, a$ has fcarce, perfiaps,
been attempted by the government of any other
coyntry which pretended to be free. It bears
the evident marks of having originally been,
what the honed and downright Doctor JDouglas
aiTures us it was, a fcheme of fraudulent debtors
to cheat tlieir creditors. The government of
Penfylvania, indeed, pretended, upon their firft
cmiffion of paper money, in i722> to render
their paper of equal value with gold and filver^
by ena<5ting penalties againft all thoie who made
any difference in the price of their goods when
they fold them for a colony paper, and when
they fold them for gold and fUver ; a regulation
equally tyrannical, but much lefs effeftual than
that which it was meant to fupport. A pofitive
law may render a Ihilling a legal tender for a
guinea 5 becaufe it may dire<5t the courts of juf-
tice to di (charge the debtor who has made that
tender. But no pofitive law can oblige a perfon
v/ho fells goods, and who is at liberty to fell or
not to fell, as he pleafes^ to accept of a ihilling
as equivalent to a guinea in the price of them»
Notwithilanding any regulation of this kind, it
appeared by the courfe of exchange with Great
Britain, that a hundred pounds fterling was oc-

I o cafionaily

tttE WEALTH OF NATIONS. 495

tztxonsi&f confidtred as equivalent, in fome of c ha p.
the colonies, to a hundred and thirty pounds,
and in others to fo great a fum as eleven hun-
dred pounds currency ; this difference in the
Value arifing from die differcoce in the*quantity
of paper emitted in the different colonies, and in
the diftance and probability of the term, of its
final difcharge and redemption-
No law, therefore, could be more equitable
than the a6fc of parliament, fo unjuftly com-
plained of in the colonies, which declared
that no paper currency to be emitted there in
time coming, ftiould be a legal tender of pay-
ment.

Pensylvania was always more moderate in its

emilTions erf* paper money than any other of our
colonies. Its paper currency accordingly is faid
never to have funk below the value of the gold and
filver wbi(^h was current in the colony brfore the
firft emiflion of its paper mcwiey. Before that
emiflion, the colony had raifed the denomination
^f its coin, and had, by a6l of aflembly, ordered
five Ihillings fterling to pafs in the colony for
fix and three-pence^ and afterwards for fix and
eight-pence. A pound colony currency, there-
fore, even when that currency was gold and
filver, was more than thirty per cent, below the
value of a pound fterling, and when that cur-*
rency was turned into paper, it was fcldom
much more than thirty per cent, below that va-
lue. The pretence for raifing the denomina-
tion of the coin, was to prevent the exportation

4^6 THE NATURE AND CAUSES OP

BOOK bf gold and filvcr, by making equal quantities
of thofe metals pafs for greater fums in the co-
lony than they did in the mother country. It
was found, however, that the price of all goods
from th% mother country rofe exa6Uy in propor-
tion as they raifed the denomination of their
coin, fo that their gold and filver were exported
as faft as ever.

The paper of each colony being received in
the payment of the provincial taxes, for the full
value for which it had been iffued, it neceflarily
derived from this ufe fome additional - value^
over and above what it would have had^ from
the real or fuppofed diftance of the term of its
final difcharge and redemption. This additional
value was greatei: or lefs, according as the quan-
tity of paper ifTued was more or lefs above what
could be employed in the payment of the taxes
of the particular colony which iffued it^ It was iii
all the colonies very much above what could bei
employed in this manner.

A ?RiNCE, who fhouki enafl: that a certain
proportion of his taxes fhould be paid in a paper
money of a certain kind, might thereby give a
certain value to this paper money ; even though
the term of jts final difcharge and redemption
Ihould depend altogether upon the will of the
prince. If the bank which iffued this paper
was careful to keep the quantity of it always
jTomewhat i)elow what could eafily be employed in
this manner, the demand for it might be fuch
as to make it even bear a premium, or fell for

fomewhat

THE WEALTH OF NATIONS. 497

fomewhat moie in the market than the quan-- chap.

tity of gold or filver currency for which it wa» ^

ifllied. Some people account in this manner for
^hat is called the Agio of the bank of Amfter^
dam, of for the fupcriority of bank mongy over
Current hioney; though this bank money, as
they pretend, cannot be taken out of the bank at
the will of the owner. The greater part of
foreign bills of exchange mud: be paid in bank
money^ that is, by a transfer in the books of the
bank ; and the diredors of the bank, they al-
lege^ are careful to keep^ the whole quantity
6f bank money always below what this ufe
6ccaiions a demand for. It is upon this ac-^
count, they fay, that bank money fells for a
premium, or bears an agio of four or five per
eent. above the fame nominal fum of the gold
and filver currency of the country. This account
of the bank of Atnfterdam, however, it will
appear hcreafcer, is in a great meafure chi-
merical.

A PAPER currency which falls below the value
of gold and filver coin, does not thereby fink
the value of thofe metals, or occafion equal
quantities of them to exchange for a fmaller
quantity of goods of any other kind. The pro-
portion between the value of gold and filver and
that of goods of any other kind, depends in all
cafes, not upon the nature or quantity of any
particular paper money, which may be current
in any particular country, but upon the richnefs
or paverty of the mines, which hagpen at any

Vol. I. X K particular

498 THE NATURE AND CAUSES OF

BOOK particular time to fopply the great market of the
eommcrcial world with thofe metals* It de-
pends upon the proportion between the quantity
of labour which is neccffary in order to bring a
certain quantity of gold and filver to market^
and that which is neccffary in order to briiyg
thither a certain quantity of any other iprt of
goods.

If bankers are retrained from iffuing any cir-
culating bank notes, or notes payable to the
bearer, for lefs than a certain fum ; and if fhey
are fubjefted to the obligation of an immediate
and unconditional payment of fuch bank notes
as foon as prefcnted, their trade may, with fafety
to the public, be rendered in all other refpedU
perfeftly free. The late multiplication of bank-r
ing companies in both parts of the united
kingdom, an event by which many people have
been much alarmed, inftead of diminifhing, in-
creafes the fecurity of the public. It obliges
all of them to be more circumfpe<5t in their
conduft, and, by not extending their currency
beyond its due proportio|i to their caih, to guard
themfelves againft thofe malicious runs, which
the rivaHhip of fo many competitors is always
ready to bring upon them. It reftrains the cir-
culation of each particular company within a
narrower circle, and reduces their circulating
notes to a finaller number. By dividing the
whole circulation into a greater number of parts^
the failure of any one company, an accident
y^hich, in the courfe of things, muft fornetimes

happenjj

THE WEALTH OF NATIONS. 499

happen, becomes of lefs confequence to the c h a p.
public. This free competition too obliges all
bankers to be more liberal in their dealings with
their cuftomers, left their rivals fliould carry them
away. In general, if any branch of trade, or any
divifion of labour, be advantageous to the pub-
lic, the freer and more general the compe-
tition, it wiU always be the more fo^

JND OF THE FIRST VOLUME,

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